The Government has announced an increase in the pensioner rebate for individuals not of age pension age to $1,608 and to $1,155 each for couples, with effect from the current 2000-01 income year.
The higher rebates will allow individual pensioners below age pension age to have income up to $15,970, without paying income tax. This compares to $12,652 in 1999-00. Couples with equal incomes will be able to have income up to $26,606 combined without having to pay income tax, compared to $21,524 in 1999-00.
The increase in the Medicare levy threshold to $15,970 for single pensioners below seniors age, also announced in this Budget, will ensure that such pensioners with incomes up to $15,970 are completely free from income tax and Medicare levy. See Press Release No. 35 Senior Australians and Pensioners: Increase in Medicare levy threshold.
Combined, these measures deliver a benefit of $40m in 2000-01 to 130,000 pensioners of less than seniors age.
Pensioners entitled to the new rebate on incomes less than $15,970 will now not be obliged to lodge tax returns as a result of the Governments measures. Such pensioners who have had tax amounts withheld will receive a refund when they lodge their 2000-01 income tax return.
The cut-off thresholds for the rebates are $28,323 for individuals, $22,035 for each member of a couple and $26,421 for each member of a couple separated by illness. All persons with taxable incomes up to those amounts will pay less tax as a result of this measure.
The regulations giving effect to the increased rebates were gazetted on 11 May 2001.
Further details of the new rebate levels are attached.
22 May 2001
CANBERRA
TABLE 1
BELOW AGED PENSIONER TAX OFFSET
FOR PENSIONERS UNDER AGE PENSION AGE
LEVELS AND THRESHOLDS FOR 2000-2001
| Age and family Situation | Tax offset level $ (a) | Shade-out threshold $ (b) | Cut-out threshold $ (b) |
| PENSIONER BELOW AGED PENSION AGE(d) | |||
| Single | 1,608 | 15,459 | 28,323 |
| Couple (each) (e) (f) | 1,155 | 12,795 | 22,035 |
| Couple separated because of illness (each) (e) (g) | 1,471 | 14,653 | 26,421 |
FOOTNOTES
| (a) | The below aged pensioner tax offset levels are sufficient to ensure that single pensioners who are below aged pension age receiving the full-rate of pension for the full year (and non-pension taxable income of $2,756), and pensioner couples who are below aged pension age receiving the full-rate of pension (and non-pension taxable income of $4,888 combined), will not be required to pay tax. |
| (b) | The shade-out threshold is the maximum taxable income at which a below aged pensioner is entitled to the full below aged pensioner tax offset. The tax offset reduces by 12.5 cents for each dollar of taxable income in excess of the shade-out threshold. The below aged shade-out threshold does not allow for the low income tax offset. |
| (c) | The cut-out threshold is the level of taxable income at which the tax offset reduces to nil. At or above this level of taxable income there is no entitlement to the below aged pensioner tax offset. |
| (d) | The below aged pensioner tax offset is available to people who receive Commonwealth of Australia government pensions and allowances who have not reached pension age within the meaning of the Social Security Act 1991. The tax offset does not apply to pensions that are not taxable. |
| (e) | In the case of a partnered pensioner, any unused portion of the tax offset is transferable to his or her partner. Taxation Ruling TR 93/31 explains how to calculate the unused portion of pensioner tax offset to be transferred to the other partner, and the adjusted tax offset threshold for the partner to whom any unused pensioner tax offset has been transferred. |
| (f) | A person who, at the time immediately before 12 March 1992 and at all times since, has been a married pensioner receiving a social security pension whose spouse has not been receiving a social security or service pension or social security benefit, is entitled to the tax offset and threshold at the single rate. |
| (g) | Pensioner couples separated because of illness receive the (higher) single rate of payment but the same income test free area as other pensioner couples. Therefore, the tax offset level for this category is higher than the level for pensioner couples not separated because of illness but lower than that for single pensioners. |