Low And Middle Income Earner Tax Offsets

A tax offset reduces the tax you pay (known as your tax payable) on your taxable income. Your taxable income is your total income minus any deductions you claim.

The low income tax offset and the low and middle income tax offsets can only reduce the tax you pay to $0 (zero). Any offset amount that remains once your tax payable is zero isn’t refunded to you.

Low and middle income earners may be eligible for the low income tax offset and the low and middle income tax offset. ATO will work out the offset amounts when you lodge your tax return.

To be eligible for one or both of these tax offsets:

• you need to be an Australian resident for income tax purposes and pay tax on your taxable income
• your taxable income needs to be below certain income thresholds.

You don’t need to complete a section in your tax return to get these tax offsets. If you meet the conditions above, your entitlement to any offset amount is added to your tax return. You can see the amount on your notice of assessment (you won’t receive the offset as a separate payment).

Any questions about Tax Offsets? Please call us today for an obligation free consultation, or visit ATO website.

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