News & Information

Introduction of Low and Middle-Income Tax Offset

May 17, 2018

On 8 May 2018, as part of the 2018 Federal Budget the coalition government introduced a new tax measure referred to as the Low and Middle-Income Tax Offset.  The new tax offset knows as LAMITO – Low and Middle Income Tax Offset was introduced as a measure to revise personal income tax rates.

It will apply from 1 July 2018 until 30 June 2022, a total of four years.  The application of the Low and Middle Income Tax Offset (LAMITO) will be applicable for Australians with a taxable income of less than $90,000.  The Low Income Tax Offset (LITO) will still continue to apply alongside the Low and Middle Income Tax Offset (LAMITO).

If you were wondering what the Low Income Tax Offset (LITO) is, it is as the name suggests; a tax offset available to all tax payers on a lower income.  According to the ATO, an individual may be eligible for a low-income tax offset if their income is below a certain threshold and they are an Australia resident for tax purposes.  An individual’s eligibility to receive the Low Income Tax Offset (LITO) is determined when they lodge their annual tax return. 

The introduction of the 2018 Federal Budget also announced changes to LITO.  From 1 July 2022 the low-income tax offset will increase from $445 to $645.  It is important to note that the tax offset you will be eligible for changes depending upon your annual taxable income.

Going back to the Low and Middle Income Tax Offset (LAMITO), the intention of the LAMITO is to some provide tax relief of up to $530 a year for affected tax payers.  Just as the Low Income Tax Offset (LITO), your eligibility for the Low and Middle Income Tax Offset (LAMITO) will be determined by the ATO when your lodge your annual tax return, which means you don’t have to apply for it.  If you are deemed eligible, the ATO will pay you a lump sum.

According to the federal government the Low and Middle Income Tax Offset will be subject to taxable income tests as follows:

Income

Offset

up to $37,000

$200

$37,001 to $48,000

$200 plus 3 cents for each dollar over $37,000

$48,001 to $90,000

$530

$90,001 to $125,333

$530 less 1.5 cents for each dollar over $90,000

The 2018 Federal Budget predicts that 4.4 million Australians will receive the $530 Low and Middle Income Tax Offset for the 2018/2019 financial year while another 5.6 million Australians will receive the Low and Middle Income Tax Offset.

LifeTime Financial Group are specialist (holding appropriate accreditations)advisors who are ideally positioned to assist you in selecting and then managing your retirement funds.

Would you like to discuss your personal position further with one of our highly qualified financial planners? Why not call us today on 03 9596-7733.

There is no cost or obligation for our initial conversation/meeting.

Written by Anthony Stedman of LifeTime Financial Group. A leading privately owned Melbourne Financial Planning practice.