Income Tax Offsets – What am I eligible for now?

Income Tax Offsets – What am I eligible for now?

Due to the 2019 Act receiving Royal Assent on 5 July 2019, there has been a positive modification to the Governments previously legislated Personal Income Tax Plan. This plan is to reduce the personal income tax over the next 7 years for all income earners. However, the primary focus from 2018-19 to 2021-22 will be predominantly low and middle income earners, with an increasing focus on higher income earners commencing in 2022-23 . But what really is in store for individuals when it comes to tax cuts?

LMITO (or Lamington Tax)
Low and Middle Income Tax Offset (LMITO) was originally introduced in the 2018 Act for the 2018-19, 2022-23 and 2024-25 years. The modifications that occurred from the 2018 Act to the 2019 Act were the base amount being increased from $200 to $255 and the maximum offset of $530 to $1,080, as well as the offset now being available from 2018-19 to 2021-22. The new law is outlined in the table below.

Income                               Offset
Up to $37,000                      $255
$37,001 to $48,000             $255 plus 7.5% of the excess over $37,000
$48,001 to $90,000             $1,080
$90,001 to $126,000            $1,080 less 3% of the excess over $90,000

Even though LMITO is being introduced this year and will be around for years to come, the Low Income Tax Offset (LITO) is not going anywhere anytime soon. As a recap, if your taxable income is less than $66,667, you will be eligible for LITO. The maximum tax offset of $445 applies if your taxable income is $37,000 or less. This amount is reduced by 1.5 cents for each dollar over $37,000.

Filling out my 2019 tax return
When you are preparing and lodging your tax return, whether you do it yourself or you have a Tax Agent to lodge it for you, the tax offsets are automatically calculated and will be applied to your return, depending on your eligibility. These tax offsets are non-refundable offsets and will only reduce your tax payable to zero.

The Future
As outlined in the 2018-19 budget and the Personal Income Tax Plan, LITO and LMITO will be merged to create a modified LITO from 1 July 2022. This will increase the maximum offset of $445 to $700, with the offset being phased out at $66,667. Best of luck for the years to come!

For more information on low and middle income tax offsets please visit the ATO website –

By Andre Avedissian