C25/2002 SENIOR AUSTRALIANS TAX OFFSET (SATO)

Purpose

The purpose of this departmental instruction is to explain what the Senior Australians tax offset (SATO) is, who is eligible and how to receive the offset.

Background

SATO was introduced in the 2001 Budget and is administered by the Australian Tax Office (ATO).  SATO provides eligible people with an increased effective tax-free threshold.

What is SATO?

SATO is a tax offset (formerly known as a tax rebate) available to people who satisfy the four eligibility conditions. It allows eligible people to earn more income before they have to pay tax or Medicare levy.

SATO is applied against the tax liability assessed on a person's taxable income. In some cases, SATO will reduce a person's tax liability to nil. There is also an increased Medicare levy threshold ($20,000) for persons who are eligible for SATO.

Eligibility

To eligible for SATO you must satisfy the four following conditions:

1. meet the age requirements,
2. be eligible to receive a Commonwealth of Australia age pension or a  payment from DVA, regardless of whether or not you received such a payment,
3. have not been in prison for the whole income year, and
4. satisfy the income threshold that applies to you.

The age requirements

The first condition is the age requirement.  You satisfy the age condition of SATO if, on 30 June 2002, you were a male aged 65 years or more or a female aged 62 years or more.

Age condition – veterans and war widows

Veterans, war widows and war widowers satisfy the age condition of SATO at the earlier veteran pension age of 60 years or more for men and 57 years or more for women; ages as at 30 June 2002.  The age criterion is not restricted to veterans with qualifying service for the purposes of SATO.

Partners of veterans

To be eligible at the earlier veteran pension age the claimant must be either a veteran or war widow or war widower.  Those who receive a benefit because they are the partner of a veteran (and are not themselves a veteran, war widow or war widower) do not satisfy the age condition of SATO at the earlier age.  Partners will satisfy the age condition of SATO at the age pension age.

Factsheet

Factsheet PAT24: Senior Australians Tax Offset contains more detailed information about SATO.

Changes to SATO assessment

There are some changes to the second eligibility condition of SATO.

Previously, veterans, war widows and war widowers satisfied the second condition if they were in receipt of a service pension or income support supplement.  The recent legislative amendments extended this eligibility criterion to those persons who were eligible, but not in receipt of a payment, benefit or allowance under the Veterans' Entitlements Act 1986. These changes take effect from 1 July 2000.

People who are eligible for SATO because of the extended criteria in condition 2 (eligibility for Commonwealth age pension or payments from DVA), can claim for the 2002 income year by completing the relevant questions on the income tax return.

Amendment to 2001 tax assessments.

People can seek an amendment to their 2001 income year assessment if they qualify for SATO under the new rules, because the new rules are retrospective, effective from 1 July 2000.

Taxpack 2002

Note: the following information is specific to SATO claims for 2001/02 tax assessments.

Taxpack 2002 and Taxpack for retirees outline SATO eligibility.  Questions are included for taxpayers to indicate whether the earlier pension age applies to them.

To claim SATO a person must complete questions 6 and T2 in Taxpack 2002 OR questions 1 and 19 in Taxpack for retirees.

Veterans, war widows and war widowers must complete label Y at question 6 in Taxpack 2002 OR question 1 in Taxpack for retirees to be assessed for SATO at the earlier age.

The ATO will do the rest.

133 254

The Taxpack information includes some generic information about who is a veteran, war widow or war widower.  This is to assist people to determine whether they are eligible for SATO at the earlier age.  This information is followed by the DVA website details and the general enquiry number 133 254.

Information in Taxpack and on the internet is designed to be as simple as possible, however, there is a likelihood that some people will still contact DVA for assistance in filling out their tax return.

It is essential that people who answer calls to this number are made aware of SATO administration and eligibility.

DVA website

The DVA website (www.dva.gov.au) will be updated with a link to information specific to SATO.  Information will also be available on the DVA intranet on the Budget page within the National Office Income Support site a — t http://sharepoint/servingourcustomers/incomesupport/Pages/Default.aspx

This information is more detailed than the information included in Taxpack 2002.

It is hoped that people will be able to gain the necessary information for SATO from the website to minimise queries.  It is most important for people to note that self identification is only an issue for people aged above 60 and less than 65 (males) and above 57 and less than 62 (females).

Q&A sheet for DVA staff

DVA staff need only answer questions relating to veteran, war widow and war widower eligibility and veteran pension age.  A Q&A sheet to assist with likely questions has been distributed to Income Support Managers for distribution to staff and managers likely to answer calls to the 133 254 number.

All other queries about SATO should be referred to the Personal Tax Infoline: 132 861 press 1.

Legislation

Legislation amending the eligibility criteria was passed on 27 June 2002.  This change was contained in the Taxation Laws Amendment Act (No.2) 2002 and affects section 160AAAA and 160AAAB of the Income Tax Assessment Act 1936.  Eligibility for veterans to receive SATO at the earlier veteran pension age is determined by sections 160AAAA and 160AAAB of the Income Tax Assessment Act 1936.

The Veterans' Entitlements Act 1986 required no legislative changes.

NO Policy contacts

If you have any queries about this information please contact Elizabeth Quinn on (02) 6289 4773 or Jacqui Mitchell on (02) 6289 6372.