The low and middle income tax offset (LMITO) was first announced in the 2018 budget and was updated in the 2019-2020 budget in May. The offset is designed to povide tax relief to the majority of individual tax payers commencing in the 2019 financial year. It operates in addition to the long-standing low income tax offset (LITO). The LMITO will run from 1 July 2018 to 30 June 2022.

The recent budget changes, as outlined by the ATO here, adust the LMITO as follows:

  • increase the maximum offset from $530 to $1,080
  • increase the base amount from $200 to $255
  • alter the rates and thresholds somewhat.

The LMITO changes will mean a larger offset and less tax for most individuals.

The problem for early lodgers of 2019 tax returns is that the changes have not been legislated as yet. Parliament is not sheduled to sit until at least July and the timing of the legislation passing is uncertain. Anyone lodging returns prior to the legislation passing will be subject to the current lower LMITO rates. Therefore, to claim any additional offset, these individuals would need to amend the return after legislation is passed. This will likely cause a few inconveniences and decisions to be made by individuals and tax agents regarding the timing of lodgement.

You can use our calculator for working out the difference in LMITO for both pre-legislation and post-legislation.

If you wish to discuss any aspects of your entitlement to Low Middle Income Tax Offset or others, please contact us to make an appointment.