How Much Can An Australian Pensioner Earn Before Paying Tax?

How Much Can An Australian Pensioner Earn Before Paying Tax

As an Australian pensioner, you might be wondering about the income thresholds to know whether you need to pay tax. Well, understanding the tax rules, and thresholds is important for managing your finances in retirement. 

In this informative guide, we’ll explore the income limits that Australian pensioners can earn before paying taxes. We’ll dive into the details, address common concerns, and offer you the latest information to help you make informed decisions. 

Income And Taxation For Australian Pensioners

Pensioners are subject to various income thresholds and tax laws, much like Australian taxpayers. It is important to remember that these thresholds might alter, thus remaining current is critical. Here is a breakdown of the pensioner income thresholds before taxation as of the 2022–2023 fiscal year:

  • Age Pension: A pensioner can earn up to $178 a fortnight (for singles) or $316 a fortnight (for couples) from eligible employment or other sources without affecting their Age Pension entitlements.
  • Senior Pensioners: If you’re eligible for the Senior Australians and Pensioners Tax Offset (SAPTO), you can earn even more before paying income tax. As a single senior pensioner, you can have a maximum taxable income of $32,279 per year. For couples, the threshold is $28,974 per person.

Many pensioners are unaware of the tax offsets they may be eligible for, such as SAPTO. These offsets can significantly reduce or eliminate their income tax liability.

What Is Senior Australians and Pensioners Tax Offset (SAPTO)?

Australia has SAPTO tax offset which is specifically designed to provide relief to senior Australians, including Age pension recipients. It aims to reduce or eliminate the tax payable on their eligible income. A few key points about SAPTO include: 

  • Eligibility: To qualify for SAPTO, you must meet certain age and income requirements. Typically, you need to be of Age Pension age or older and have an eligible income below the SAPTO threshold.
  • Thresholds: The SAPTO income thresholds determine the amount of offset you can claim. As of the 2022-23 financial year, the thresholds are $32,279 for singles and $28,974 per person for couples. These thresholds include both taxable and tax-free income.
  • Offset Amount: The offset can reduce your income tax liability to zero if your eligible income is below the relevant threshold. It may also provide a partial offset if your income is slightly above the threshold.

Calculating your eligible income can be confusing, as it involves various sources of income and tax concessions. It’s essential to consider all income streams and deductions accurately.

Managing Your Income

Pensioners who approach or exceed the income thresholds should consider strategies to manage their income tax effectively. Here are some tips to help you stay within the thresholds and minimise your tax liability:

  • Income Splitting: If you’re a couple, consider splitting your investments to distribute income more evenly between partners and maximise the use of SAPTO thresholds.
  • Investment Choices: Opt for investments that provide tax-effective income, such as Australian shares, which may come with franking credits that can offset tax.
  • Utilise Deductions: Ensure you claim all eligible deductions to reduce your taxable income.
  • Stay Informed: Keep yourself informed about changes in tax thresholds, deductions, and offsets to adjust your financial strategies accordingly.


As a retiring person, you might have to know income thresholds and taxation rules for Australian pensioners. However, the Senior Australians and Pensioners Tax Offset (SAPTO) can provide significant tax relief for eligible seniors, allowing them to earn more income before paying tax. If you find it challenging and are not able to decide on how much you can earn as an Australian pensioner, you can contact KPG Taxation which has expert tax specialists who will work together with you and ensure you secure maximum tax benefit. 

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