Low and middle income earners

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

• 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.

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 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.

The maximum offset is $1080 per annum. The base amount is $255 per annum.

It does not mean that you will get an extra $1,080 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.

If your taxable income is:

• less than $37,000, your offset entitlement will be $255
• more than $37,000 but less than $48,000, your offset entitlement will be $255 plus 7.5% of the excess above $37,000
• more than $48,000 but less than $90,000 your offset entitlement will be $1,080
• more than $90,000 but less than $126,000, your offset entitlement will be $1,080, less 3% of the excess above $90,000.