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  • Low and middle income earners

    If you are an Australian resident for income tax purposes and you pay tax on your taxable income, 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 tax payable on taxable income. These are non-refundable offsets, so the following applies:

    • any eligible offset amount can only reduce your tax payable to zero, 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 can't reduce the tax payable on this income.

    On this page:

    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 maximum offset is $1,080 per annum. The base amount is $255 per annum.

    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.

    In other words, you might not be entitled to the full $1,080. You are not required to do anything to claim the low and middle income tax offset, we will work out how much you are entitled to and include it 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.

    Understanding your low and middle income tax offset

    You are not required to do anything to claim the low and middle income tax offset. We will work this out for you when you lodge your tax return.

    The offset will reduce the amount of tax you pay on your taxable income. This is a non-refundable tax offset, so you can't receive a refund for any unused amount of the offset.

    If you have not received any income you can't claim this tax offset.

    If you have received income, the amount of the offset you are entitled to depends on your taxable income. If the offset amount reduces your tax payable to zero, any amount of the low and middle income tax offset that is unused is not refunded to you.

    If your tax assessment results in a tax refund this will be deposited in to your nominated bank account. However, if you have a debt with us or any Australian government agency, we are required by law to use refunds or credits to pay debt.

    If your taxable income:

    • does not exceed $37,000, you will be entitled to an offset amount of $255 on your tax payable.
    • exceeds $37,000 but is not more than $48,000, you will be entitled to an offset amount of $255, plus 7.5% of the excess above $37,000 to a maximum offset of $1,080 on your tax payable.
    • exceeds $48,000 but is not more than $90,000, you will be entitled to the maximum offset amount of $1,080 on your tax payable.
    • exceeds $90,000 but is not more than $126,000, you will be entitled to an offset amount $1,080 less 3% of your taxable income above $90,000.

    You can find out how much of an offset you were entitled to in the 'non-refundable tax offsets' section of your notice of assessment.

    To get an estimate of the amount of tax you will need to pay, use the Income tax estimator.

    Example – income up to $37,000

    Jacqueline's taxable income is $18,000. As her income was less than $37,000, she is eligible to a low and middle income tax offset amount of $255. As Jacqueline's taxable income is already under the tax-free threshold, she doesn't have any tax to pay.

    While Jacqueline is eligible to a low and middle income tax offset of $255, her basic income tax payable can't be reduced any lower than $0.

    As the low and middle income tax offset is a non-refundable tax offset, the unused offset can't be refunded.

    End of example

     

    Example – income exceeds $37,000 but is not more than $48,000

    Jeff's taxable income is $45,000. As his income is between $30,000 and $48,000, he is eligible to a low and middle income tax offset amount of $255 plus 7.5% of his income amount above $37,000.That is:

    • $45,000 − $37,000 = $8,000
    • 7.5% × $8,000 = $600
    • $255 + $600 = $855

    Jeff's tax payable can be reduced by up to $855 using the low and middle income tax offset.

    End of example

     

    Example – income exceeds $48,000 but is not more than $90,000

    Anita's taxable income is $50,000. As Anita income is more than $48,000 but less than $90,000, she is eligible to a low and middle income tax offset of $1,080.

    Anita's tax payable can be reduced by up to $1,080 using the low and middle income tax offset.

    End of example

     

    Example

    Andre's taxable income is $92,000. As Andre's income is more than $90,000 but less than $126,000, his low and middle income tax offset entitlement will be $1,080 minus 3% for the amount above $90,000.

    That is:

    • $92,000 − $90,000 = $2,000
    • 3% × $2,000 = $60
    • $1,080 − $60 = $1,020

    Andre's tax payable can be reduced by up to $1,020 using the low and middle income tax offset.

    End of example

    See also:

    Last modified: 29 Aug 2019QC 31944