Do I have to pay tax?

The tax free threshold for 2013/2014 and 2014/2015 years is $18,200. You also get the benefit if you earn less than $37,000 for the year. The low income tax offset is paid up to $445 from the tax you normally have to pay. So you can earn up to $20,542 before you have to pay tax.

The meaning of “assessable income” is “income that can be taxed” and they are total of:

  • salary and wages
  • interest from bank accounts
  • dividends and other income from investments
  • bonuses and overtime an employee receives
  • allowance(s) paid by your employer
  • commission a salesperson receives
  • Centerlink payments and pensions
  • Rent
  • Overseas income & investment income

The meaning of “taxable income” is the income you have to pay tax on. It is the term used for the amount left after you have deducted all the expenses you are allowed to claim from your assessable income.

Taxable income = Assessable income – allowable deductions

A simple tax calculator is available to help you calculate the tax on your taxable income. The Comprehensive tax calculator also takes into account Medicare levy, higher education loan scheme repayments, tax offsets and tax credits to give you an estimate of the amount of your tax refund or debt.

Seniors and pensioners tax offset (SAPTO)

If you fit this category and are entitled to the senior and pensioners’ tax offset, you are able to earn each year as a pensioner before having to pay tax. The thresholds and conditions are listed below:

Rebate income thresholds for SAPTO

  Column 1 Column 2
Seniors and pensioners Maximum tax offset threshold Cut-out threshold
Single $32,279 $50,119
Each member of a couple $28,974 $41,790
Each member of an illness-separated couple $31,279 $47,599

If you are a pensioner and also earn an income, you may claim or vary the seniors and pensioners tax offset (SAPTO) if you meet certain conditions relating to (1) eligibility for Australian Government pensions or allowances and (2) income:

Condition 1:  Eligibility for an Australian Government age pension or similar type of payment

To meet this condition, you must fit into one of the following categories:

  1. You are receiving an Australian Government age pension or allowance from Centrelink, or a pension, allowance or benefit from the Department of Veterans’ Affairs, at any time during the 2014–15 financial year.
  2. You meet the Centrelink age pension age requirement and would be eligible for an Australian Government age pension, but are not receiving one because you have not made a claim or because of the application of the income test or the assets test and you satisfy one of the following:
    • you have been an Australian resident for age pension purposes for 10 years or more, of which at least five years were continuous
    • you have a qualifying residence exemption because you arrived in Australia as a refugee or under a special humanitarian program
    • you are a woman who was widowed in Australia (at a time when both you and your late partner were Australian residents), you have made a claim for the age pension, and you had two years residence immediately before your claim
    • you received a widow B pension, widow allowance or partner allowance immediately before turning age pension age
    • you would qualify under an international social security agreement.
    • You meet the veteran pension age test and would be eligible for a pension, allowance or benefit from Veterans’ Affairs but are not receiving one because you have not made a claim or because of the application of the income test or the assets test, and you are either a:
  3. veteran with eligible war service
  4. Commonwealth veteran, allied veteran or allied mariner with qualifying service.

Veteran pension age test

  • You meet the veteran pension age test if one of the following applied to you and you were eligible for a pension, allowance or benefit under the Veterans’ Entitlements Act 1986:
  • you have eligible war service – that is, service in World War II or operational service as a member of the Australian Defence Force
  • you are a Commonwealth or allied veteran who served in a conflict in which the Australian Defence Force was engaged during a period of hostilities – that is, World War II, or in Korea, Malaya, Indonesia or Vietnam
  • you are an Australian or allied mariner who served during World War II
  • you are the war widow or widower of a former member of the Australian Defence Force.

Condition 2: Rebate income threshold

Rebate income threshold

Your rebate income is used to determine your eligibility for the SAPTO. Your rebate income includes your:

  • taxable income
  • adjusted fringe benefits (reportable fringe benefits multiplied by 0.535)
  • total net investment loss (this includes both net financial investment loss and net rental property loss)
  • reportable super contributions (this includes both reportable employer super contributions and deductible personal super contributions).