Since the introduction of the Low and Middle Income Tax Offset (LMITO), there has been some confusion around what it is, who will receive it, and the amount of the offset they will receive. The LMITO was revised in the 2019/20 Federal Budget and takes effect from the 2018/19 financial year. It is a measure that helps low and middle income earners reduce their annual tax liability.
Some initial publications attempting to explain the offset likened it to the $900 stimulus payment distributed by the Kevin Rudd Government back in 2009. However, it is important to note that this does not mean you will automatically get an extra $1,080 back when you lodge your tax return.
The LMITO is a non-refundable offset, meaning it can be used to reduce the amount of tax you pay, but cannot generate a tax refund on its own. In addition, any unused amount of the offset cannot be refunded or carried forward.
The amount of the offset you will receive largely depends on your taxable income, as detailed below:
| Taxable Income | Offset |
| Less than $37,000 | $255.00 |
| $37,001 to $48,000 | $255 plus 7.5% of the portion of your taxable income that exceeds $37,000 |
| $48,000 to $90,000 | $1,080 |
| $90,001 to $126,000 | $1,080 less 3% of the portion of your taxable income that exceeds $90,000 |
| $126,001 and above | $0 |
This offset is in addition to the existing Low Income Tax Offset (LITO).
Should you have any questions in relation to your eligibility for the LMITO, please feel free to contact us.