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Australia Aged Care & Seniors Tax Guide

Australian tax rules for seniors and aged care. The guide covers: the Senior and Pensioners Tax Offset (the 'SAPTO') — the SAPTO is the 'tax offset' for the 'seniors' and the 'pensioners' who have reached the 'Age Pension age' (the 'pension age' — 67 years from 1 July 2023); the SAPTO is the 'maximum offset' of $2,230 for the 'single seniors' (and up to $1,602 for each member of a couple, or $2,040 for the 'couple separated by the illness'); the SAPTO phases out at the 'income threshold' of $32,279 for the 'single seniors' and $57,948 for the 'couples' (combined) — the offset reduces by 12.5 cents per dollar above the threshold; the SAPTO is NOT available to the 'self-funded retirees' who do NOT receive the 'Age Pension' (the 'SAPTO' is available to the 'taxpayers' who are 'eligible for the Australian Government Age Pension' but may receive the 'full offset' even if the 'Age Pension' is not payable); the Age Pension means testing — the 'Age Pension' is the 'government pension' paid by the 'Centrelink' (the 'Services Australia'); the 'Age Pension' is subject to the 'income test' and the 'assets test' (the 'test that gives the lower rate' applies); the 'income test' includes the 'deeming of the financial assets' (the 'deeming rates' are 0.25% for the first $60,400 for the singles and $100,200 for the couples (the 'deeming threshold') and 2.25% for the 'above threshold' amounts from 1 July 2024); the 'assets test' includes the 'home' (the 'principal home' is exempt from the 'assets test' for the 'Age Pension' up to the 'home value limit' of the 'home exemption limit' — the 'principal home' is NOT exempt from the 'means-tested care fee' in the 'aged care'); the aged care fees — the 'aged care' fees include: (i) the 'basic daily fee' (the 'BDF' — the 'standard resident contribution' of 85% of the 'single Age Pension' per day), (ii) the 'means-tested care fee' (the 'MTCF' — the 'income-tested fee' and the 'assets-tested fee' for the 'care services'), (iii) the 'refundable accommodation deposit (the 'RAD')' — the 'RAD' is the 'lump sum payment' for the 'accommodation' in the 'aged care home' (the 'RAD' is 'refundable' when the resident leaves the 'aged care home'); the downsizer contribution — the 'downsizer contribution' allows the 'seniors aged 55+ years' to contribute the 'proceeds from the sale of the home' (the 'home' that was the 'principal residence' for at least 10 years) to the 'superannuation' (the 'downsizer contribution cap' is $300,000 per person — the 'couples' can contribute $300,000 each from the sale of the same home, for the total of $600,000); the 'downsizer contribution' does NOT require the 'work test' and is NOT subject to the 'non-concessional contributions cap'.

Senior and Pensioners Tax Offset (SAPTO)

  • Maximum offset: $2,230 for the 'single seniors'. $1,602 for each member of a 'couple' (living together). $2,040 for the 'couple separated by the illness'. $2,040 for the 'single seniors' who are NOT the 'taxpayers' (the 'SAPTO' is claimed through the 'tax return').
  • Phase-out: The SAPTO phases out at the 'income threshold' of $32,279 (single) and $57,948 (couple combined). The offset reduces by 12.5 cents per dollar above the threshold. The 'SAPTO' is NOT available to the 'taxpayers' with the 'taxable income' above the 'phase-out limit'.
  • Eligibility: The 'SAPTO' is available to the 'seniors' who have reached the 'Age Pension age' (67 years). The 'SAPTO' is also available to the 'pensioners' who receive the 'Age Pension', the 'Service Pension', or the 'Disability Support Pension'.

For the personal tax rates and the LITO offset, see our Personal Tax Guide →.

Downsizer Contribution to Superannuation

  • $300,000 per person: The 'downsizer contribution' is the 'non-concessional contribution' of up to $300,000 per person from the 'sale of the home'. The 'couples' can contribute $300,000 each (the 'total of $600,000').
  • Conditions: The 'seller' must be 'aged 55+ years' at the time of the 'sale'. The 'home' must be the 'principal residence' for at least 10 years. The 'contribution' must be made within 90 days of the 'settlement' (the 'sale completion').
  • Age Pension impact: The 'downsizer contribution' is treated as the 'superannuation asset' (the 'financial asset') under the 'Age Pension assets test'. The 'seniors' should consider the 'Age Pension means test' impact before making the 'downsizer contribution'.

For the superannuation contributions caps and the tax treatment, see our Superannuation Guide →.

Aged Care Fees & Means Testing

  • Basic daily fee (BDF): 85% of the 'single Age Pension' per day. The 'BDF' is the 'standard resident contribution' for the 'daily care' in the 'aged care home'.
  • Means-tested care fee (MTCF): The 'MTCF' is the 'income-tested fee' and the 'assets-tested fee' for the 'care services'. The 'MTCF' is calculated by the 'Services Australia' based on the 'income' (including the 'deemed income') and the 'assets' (including the 'home' if the 'home value' is above the 'home exemption limit').
  • Refundable Accommodation Deposit (RAD): The 'RAD' is the 'lump sum payment' for the 'accommodation' in the 'aged care home'. The 'RAD' is 'refundable' when the resident leaves the 'aged care home' (or passes away). The 'RAD' is NOT 'assessable income' for the 'tax purposes'.

For the estate planning and the super death benefits, see our Inheritance & Estate Tax Guide →.