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Tax Rebates & Offsets

The low income tax offset

As well as there being no tax on the first $18,200 (the tax-free threshold, but see also below) there is also, to provide a helping hand to taxpayers who earn under a certain amount each year, a low income tax offset.

From July 1, 2012, the maximum value of the low-income tax offset (LITO) reduced from $1,500 to $445, with the reduction rate being decreased to 1.5 cents for each dollar of taxable income over $37,000. No offset will be available if your income exceeds $66,667.

This may vary if the low income taxpayer becomes or ceases to be a resident part-way through the financial year. The low income tax offset (LITO) is in addition to dependant and all other tax offsets allowed to a taxpayer.

Another way of claiming the LITO is through your PAYG withholding. Individuals eligible for LITO can claim 70% of their LITO entitlement as a reduction in the amount of PAYG withheld from their pay. The remainder of the entitlement is then taken into account in the year-end tax return.

Low income tax offset 2013-14

 

$0 - $37,000

$445

$37,001 - $66,666

$445 less 1.5% of excess over $37,000

$66,667 and above

Nil

The Tax Office has a LITO calculator (click here to access).

CHANGES
Note that LITO rates and thresholds have changed and will change again as carbon pricing mechanisms (including the trading scheme) continue. The following table summarises the changes:

 

2011-12

2012-13

2015-16

Amount

$1,500

$445

$300

LITO begins to be reduced at

$30,000

$37,000

$37,000

You are no longer eligible for LITO at

$67,000

$66,667

$67,000

Withdrawal rate

4%

1.5%

1.0%

 

NOTE: Various rebates and tax offsets apply to reduce an individual's income tax. Click here to access a table that summarises the 2013-14 tax offsets for senior Australians, pensioners, mature age workers, medical expenses and the tax offsets for low income earners.

Last reviewed 3/08/2013

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