There has been a lot of talk over the past few weeks regarding the low and middle income tax offset which will be taken into account when lodging your 2019 income tax returns. Not everyone is entitled to this tax offset and don’t expect a lump sum in your bank account from the ATO.

Key points regarding the low and middle income tax offset;

  • The maximum offset it $1080 with the base being $255.
  • You will not receive this offset as a payment from the ATO, it will be taken into consideration when lodging your income tax return. Basically the software you use to lodge yo’r return will do the workings out for you by using the offset to reduce the amount of tax payable on taxable income.
  • Anyone who lodged their returns before the tax offset was passed, the ATO will refund the amount applicable to you.
  • If your tax return results in a refund because of the tax offset and you have a debt owing with the ATO the refund will be offset against the debt.

What tax offset amount will you come under?

  • If your taxable income does not exceed $37,000, you will be entitled to an offset amount of $255.
  • If your taxable income exceeds $37,000 but not more then $48,000, you will be entitled to an offset amount of $255 plus 7.5% of the excess about $37,000.
  • If your taxable income exceeds $48,000 but not more than $90,000, you will be entitled to an offset amount of $1080.
  • If your taxable income exceeds $90,000 but is not more thank $126,000, you will be entitled to an offset amount of $1080 less 3% of your taxable income about $90,000

As mentioned above, it does not mean you will get an extra $1080 in your tax return, it basically means your taxable income amount will be offset to give you more of a refund. Please do not get confused with this.

The 2018-2019 year will be the first year the low and middle income tax offset is available and will continue going forward. The tax offset will not be included in an prior year returns not yet lodged.

If you would like to see what your taxable income might be, here is a calculator you can use as an estimate to see what the tax offset will do for your situation.