From the financial year 2019 through to 2022, there are two tax offsets with similar sounding names that taxpayers may be able to qualify for at the same time.
These offsets are non-refundable, which means they reduce your tax liability but any unused portion will not be refunded.
These offsets are calculated automatically when you lodge your tax return.
The Low Income Tax Offset (LITO)
This offset is available to individuals whose taxable income is less than $66,667. The maximum LITO for the 2019 Financial Year has been increased to $700 per person. The offset is available at a reduced rate of 5 cents per dollar for those individuals with taxable incomes of between $37,500 and $45,000 and reduced rate of 1.5 cents per dollar for individuals with taxable incomes between $45,000 and $66,667.
The Low and Middle Income Tax Offset (LMITO)
This offset is available to individual taxpayers whose taxable income is less than $126,000. If you have not received any income in the year, this offset is not available. The maximum amount of LMITO for the 2019 financial year is now $1,080 per person. The base amount is $255.
If your taxable income:
- does not exceed $37,000, you are entitled to an offset amount of $255 on your tax payable.
- exceeds $37,000 but is not more than $48,000, you are entitled to an offset amount of $255, plus 7.5% of the excess above $37,000 to a maximum offset of $1,080 on your tax payable.
- exceeds $48,000 but is not more than $90,000, you are entitled to the maximum offset amount of $1,080 on your tax payable.
- exceeds $90,000 but is not more than $126,000, you are entitled to an offset amount $1,080 less 3% of your taxable income above $90,000.
Contributed by Helene Kosasie.