‘Do I get the $1k off my tax this year from the government?’

Let’s talk about the low income tax offset (LITO) and low and middle income tax offset (LMITO).

The low and middle income offset started From 1 July 2018, although the media are constantly bringing this to your attention, you have been receiving this for some time now.

Eligible low and middle income earners may receive one or both of the:

• Low income tax offset (LITO)

• Low and middle income tax offset (LMITO).

These offsets can only reduce your tax payable to zero, it is not a bonus payment. The amount of available offset depends on your individual circumstances.

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

• Be an Australian resident for income tax purposes

• Pay tax on your taxable income

• Have a taxable income that is below certain income thresholds.

This is an automated offset when I complete your tax return.

If you are eligible, the amount of offset you're entitled to reduces the tax you need to pay when I lodge your tax return. You can see the amount of offset you receive on your tax return when I email this to you on completion of your tax return.

Low income tax offset

The amount of the low income tax offset (LITO) you receive will depend on your taxable income.

If your taxable income is:

• $37,500 or less, you will get the maximum offset of $700

• Between $37,501 and $45,000, you will get $700 minus 5 cents for every $1 above $37,500

• Between $45,001 and $66,667, you will get $325 minus 1.5 cents for every $1 above $45,000.

Low and middle income tax offset

In addition to the LITO, you may also receive the low and middle income tax offset (LMITO).

If your taxable income is less than $126,000 and you are an Australian resident for tax purposes, you will get some or all of the LMITO.

As announced in the 2022–23 federal Budget, the LMITO has been increased by $420 (referred to as the one-off $420 cost of living tax offset) for the 2021–22 income year. This increases the base amount to $675 and the full amount to $1,500.

The LMITO amount for the 2018–19, 2019–20 and 2020–21 income years remains the same at between $255 and $1,080.

The amount of offset you receive depends on your circumstances, such as your taxable income and how much tax you have paid throughout the income year.