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If you are a low-income earner and you are an Australian resident for income tax purposes, you may be eligible for both the:

• low income tax offset
• low and middle income tax offset.

You don’t have to do anything to claim the offsets. We will work them out for you when you lodge your tax return.

Tax offsets reduce the amount of your taxable income that you pay tax on. They are nonrefundable offsets, so the following applies:

• any unused offset amount can’t be refunded
• it can’t reduce your Medicare levy.

If you are under 18 as at 30.June of the income year and you have unearned income, these offsets cannot reduce the tax payable on this income.

LOW INCOME TAX OFFSET

If your taxable income is less than $66,667, you will get the low income tax offset.

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.

LOW AND MIDDLE INCOME TAX OFFSET

If your taxable income is less than $126,000, you will get some of the low and middle income tax offset.

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

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

It does not mean that you will get an extra $1,080 in your tax return.

The new low and middle income tax offset is available for the 2018-19, 2019-20, 2020-21 and 2021-22 income years and is in addition to the low income tax offset.

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.
• 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 an 3% of the excess.

EXAMPLE

Andre’s taxable income was $43,000. As Andre’s taxable income exceeds $37,000 but was not more than $48,000, his low and middle income tax offset entitlement will be $705 (Being $255 plus 7.5 per cent of the difference between$37,000 and $43,000).

Note: Whether or not Andre will receive a refund is dependent on a number of other factors for example how much PAYG withholding there was on his income.

EXAMPLE

Jacqueline’s taxable income was $18,000. As her income was less than $37,000, her low and middle offset entitlement will be $255. Jacqueline’s taxable income is

under the tax-free threshold so she doesn’t have any tax to pay. While Jacqueline is entitled to a low and middle income tax offset of $255, she won’t be able to use it.

Note: The low and middle income tax offset is non-refundable offset, so any unused offset cannot be refunded. Any offset entitlement can only reduce the amount of tax payable to zero and cannot reduce the Medicare levy.

EXAMPLE

Isaac’s taxable income is $50,000. As his taxable income is more than $48,000 but less than $90,000, his low and middle income tax offset entitlement will be $1,080.

Note: Whether or not Isaac will receive a refund is dependent on a number of other factors for example how much PAYG withholding there was on his income.

EXAMPLE

Anita’s taxable income is $103,000. As her taxable income exceeds $90,000 she will be entitled to a low and middle income tax offset of $690 being $1080 less 3 per cent of the difference between $103,000 and $90,000.

Note: Whether or not Anita will receive a refund is dependent on a number of other factors for example how much PAYG withholding there was on her income.