In the 2019–20 Federal Budget the Government announced its intention to change and build on the Personal Income Tax Plan. These changes are now law and include a new tax offset!
Low and middle income tax offset (LAMITO)
This tax offset was introduced in the 2019 financial year and is in addition to the low income tax offset. A taxpayer may be entitled to both (or part thereof).
A tax offset of $255 is available where your taxable income is between $0 and $37,000.
Where your taxable income lies between $37,000 and $48,000, the tax offset available is $255 plus 7.5% of the amount over $37,000.
A tax offset of $1,080 is available for taxpayers with a taxable income between $48,000 and $90,000.
Thereafter the tax offset is reduced by 3% of the amount over $90,000.
Taxable income over $126,000 attracts no tax offset.
It is important to note that, as a non-refundable offset, any unused LAMITO cannot be refunded. It will directly reduce the amount of tax payable but does not reduce the Medicare levy. If not all the offset is used to reduce the tax payable, there is no refund of any unused portion.
The amount of the offset you may be entitled to and the amount of any refund will differ for everyone, depending on individual circumstances such as your income level and how much tax you have paid throughout the year.