Low and Middle Income Tax Offset

Low and Middle Income Tax Offset

With the ATO taking in excess of 60,000 calls per day regarding the low and middle income tax offset, it is evident that there has been some confusion. At Power2 we have broken it down into easy to understand steps.

Who will receive the offset?

If your taxable income is less than $126,000 you will receive a payment from the low and middle income tax offset.

The amount of the offset you receive will depend on your individual circumstances. This relates to circumstances such as your income level and how much tax you have paid throughout the year.

What do you have to do?

You don’t need to do anything extra other than lodge your tax return. Lodge online or though your tax agent as usual. The ATO will pay any tax refund (which includes the new offset) into your nominated bank account between one to two weeks after you lodge.

How much will you receive?

The maximum offset is $1080 per annum. The base amount is $255 per annum.

If your taxable income is:

  • less than $37,000, your offset entitlement will be $255
  • more than $37,000 but less than $48,000, your offset entitlement will be $255 plus 7.5% of the excess above $37,000
  • more than $48,000 but less than $90,000 your offset entitlement will be $1,080
  • more than $90,000 but less than $126,000, your offset entitlement will be $1,080, less 3% of the excess above $90,000.

For example: You earn $43,000. Your low and middle income tax offset entitlement will be $705. This is calculated with $255 base amount plus 7.5%of the difference between $37,000 and $43,000. Note: Whether or not you will receive a refund is dependent on a number of other factors for example how much PAYG withholding there was on your income.

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