Eligibility for the tax offset
Between 2018–19 and 2021–22, you may have been eligible to receive the low and middle income tax offset, if you earned up to $126,000.
To be eligible, you needed to:
- be an Australian resident for tax purposes
- pay tax on your taxable income
- have a taxable income below certain income thresholds.
Receiving the tax offset
You don't need to do anything to claim this tax offset, except lodge your tax return for the relevant year. We work out the offset after you lodge.
You can see the tax offset amount on your notice of assessment at Less non-refundable tax offsets.
This offset reduces the tax you need to pay and can only reduce your tax payable to $0. It is not a separate payment. Any unused amount can't be refunded.
LMITO amounts 2021–22 income year
The LMITO was increased by $420 (a 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 2021–22 income year was the last year for the LMITO – it isn't available for 2023 onwards.
Taxable income | Offset |
|---|---|
$37,000 or less | $675 |
From $37,001 to $48,000 | $675 plus 7.5 cents for every dollar above $37,000, up to a maximum of $1,500 |
From $48,001 to $90,000 | $1,500 |
From $90,001 to $126,000* | $1,500 minus 3 cents for every dollar above $90,000 |
Examples of how the offsets reduce your tax
The following examples show how the offsets can reduce the tax you pay.
Example: taxable income over $37,000 but under $48,000
Jeff's taxable income is $45,000 for the 2021–22 income year. He is eligible for both tax offsets based on his income, worked out as:
- low income tax offset amount of $700 minus 5 cents for every dollar above $37,500
- $45,000 − $37,500 = $7,500
- $7,500 × $0.05 = $375
- $700 − $375 = $325
- low and middle income tax offset amount of $675 plus 7.5 cents for every dollar above $37,000
- $45,000 − $37,000 = $8,000
- $0.075 × $8,000 = $600
- $675 + $600 = $1,275.
We add both offset amounts together to reduce Jeff's tax payable:
- $325 + $1,275 = $1,600.
Jeff's tax payable of $5,092 is reduced by $1,600 using the offsets.
End of example
Example: taxable income over $48,000 but under $90,000
Anita's taxable income is $70,000 for the 2021–22 income year.
Anita is not eligible for the low income tax offset as her income is above $66,667.
As Anita's income is more than $48,000 but less than $90,000, she is eligible for a low and middle income tax offset of $1,500.
Anita's tax payable of $13,217 is reduced by $1,500 using the LMITO.
End of example
Example: taxable income over $90,000 but under $126,000
Andre's taxable income is $92,000 for the 2021–22 income year.
Andre is not eligible for the low income tax offset as his income is above $66,667.
Andre's income is more than $90,000 but less than $126,000. He is eligible for a low and middle income tax offset amount of $1,500 minus 3 cents for every dollar his income is above $90,000.
This is worked out as:
- $92,000 − $90,000 = $2,000
- $0.03 × $2,000 = $60
- $1,500 − $60 = $1,440.
Andre's tax payable of $20,367 is reduced by $1,440 using the LMITO.
End of exampleLMITO amounts 2018–19 to 2020–21 income years
The LMITO amount for the 2018–19, 2019–20 and 2020–21 income years was 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.
The table below shows the amount of LMITO you can receive which depends on your taxable income.
Taxable income | Offset |
|---|---|
$37,000 or less | $255 |
More than $37,000 but less than $48,000 | $255 plus 7.5 cents for every dollar above $37,000, up to a maximum of $1,080 |
More than $48,000 to $90,000 | $1,080 |
More than $90,000 but less than $126,000* | $1,080 minus 3 cents for every dollar above $90,000 |