Your lower and middle income clients won’t see any benefit from a new tax offset announced in May’s Federal Budget until about a year from now, when a lump sum credit is recorded in their tax assessment, courtesy of the ATO.
The Low and Middle Income Tax Offset (LMITO), like all tax offsets, reduces the amount of income tax payable on your client’s taxable income. It is intended to be an adjustment made in arrears — that is, applied each year with the annual income tax assessment. Legislation for LMITO has only recently been approved by both houses of Parliament at the end of June.
LMITO has been available since 1 July 2018, and is aimed to complement the existing Low Income Tax Offset for those taxpayers a rung or so up the pay ladder. But the non-refundable offset is not to be a permanent fixture in the tax landscape, as it is scheduled to expire at the end of the 2021-22 financial year.
Taxpayers with taxable income of $37,000 a year or less will enjoy benefits of a value up to $200, while those with assessable income of between $37,000 and $48,000 have access to an increasing rate of three cents in the dollar up to a maximum benefit of $530.
But the offset doesn’t stop at income of $48,000. Although the maximum amount of offset is fixed at $530, it is available up to an assessable income level of $90,000. Thereafter (up to $125,333) it phases out at a rate of 1.5 cents per dollar.
LMITO is planned to dissolve after 30 June 2022 as its affect will be built in to adjusted tax rates at that time (assuming successive governments do not fiddle with these arrangements).
A tax boost for low and middle income earners A tax boost for low and middle income earners A tax boost for low and middle income earners A tax boost for low and middle income earners A tax boost for low and middle income earners A tax boost for low and middle income earners A tax boost for low and middle income earners
# ATO], [low income], [middel ncome], [tax offset]
Comments