Why Does Your Tax Return Look Different This Year?
This year’s income tax return refund might not look as bountiful as it did in the previous year, as some of the offsets and rebates introduced during the pandemic will no longer be available to apply to your return. This includes the Lower-Middle Income Tax Offset.
The LMITO offset will not be available for your 2022-23 tax return, as it was confirmed late last year that the previous financial year would be the last time it would be applied to returns.
The LMITO acted as an offset, meaning it reduced the tax you pay (your tax payable) on your taxable income. Your taxable income is your total deduction minus any deductions you claim. Offsets are not used to reduce your Medicare levy & Medicare levy surcharge (if there is any). The LMITO did not affect this part of your tax return.
What Does This Mean For My Next Tax Return?
You may have noticed a slight boost to your tax returns in prior years due to your tax payable being lowered by LMITO. This will no longer be the case as the LMITO is no longer available, and compared to previous years with LMITO in effect, you may notice a greater difference in your tax refund.
However, the Low Income Tax Offset (LITO) may still be available (pending any further rulings or changes). The ATO will automatically apply this after you lodge your tax return this year. 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 & $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
Consulting with a tax agent or professional like us can significantly assist with your tax returns and their preparation for the coming year, particularly regarding any offsets or deductions you may be eligible for. Why not start a conversation with us today?
