As there has been a HUGE amount of press in relation to the new LMITO (Low Middle Income Tax Offset) We would like to share the updated details with you. The old LITO ( Low income Tax Offset) is also remaining at this stage and can work jointly with the new offset up to $66,666
Under Budget 2018 proposals
• From 1 July 2018 to 30 June 2022 the new LMITO applies in addition to LITO
• From 1 July 2022 both LITO and LMITO will be replaced by a single LITO
Under Budget 2019 proposals
• The maximum value of LMITO originally set at $530 was increased to $1080,
• The new LITO from 1 July 2022 (max value) increased from $645 to $700.
LITO calculation table from 1 July 2012 to 30 June 2022*
LMITO calculation table from 1 July 2018 to 30 June 2022*
|Please note these amounts are Offsets not Refunds. This offset is subtracted from your tax payable before Medicare Levy. If the offset is more than your tax payable the difference is not refunded, and it also can’t be used to offset Medicare Levy.
For example for a client with the following scenario – tax payable $900 + Medicare levy $300 total payable to the ATO $1200 . Assume eligible for $1080 Offset. Tax payable $900 used $900 offset leaving no Tax payable (remainder of offset $180 is lost ). Medicare Levy is still payable so the new total paid to the ATO $300.
To see how the offsets calculate at various Taxable Incomes:-