Did you know that the Low and Middle Income Tax Offset (LMITO) is also known colloquially as “Lamington”?
Are you curious about the Low and Middle Income Tax Offset, and if you might be eligible for it this tax time? It might be worth starting a conversation with us about this tax offset, and how you can benefit from it this coming financial year.
The tax offset allows low and middle-income earners to reduce the amount of tax that they pay, but only in such a way that it lowers their tax bill. It cannot be used to generate a tax refund or to pay your Medicare levy, however.
A tax offset is different from a tax deduction. Though both reduce the amount of tax you have to pay, tax deductions reduce your taxable income (such as through work expenses). A tax offset is then deducted from your tax liability (what you owe in total).
Depending on your income, you may be eligible for a tax offset of up to $1,080 this financial year as a single, and up to $2,160 for eligible couples. The LMITO amount will be used to offset (or reduce) the tax you need to pay on your taxable income. The amount of offset received depends on your circumstances, such as your taxable income and how much tax you have paid, it is not a bonus payment.
The Lower and Middle Income Tax Offset has been extended for another year, with the deadline for the offset now set to 30 June 2022.
There is no need to complete anything additional in your income tax return to be eligible for the LMITO. The Australian Tax Office (ATO) will work out whether you are eligible for any tax offsets when it assesses your income tax return on lodgement.
If you are still unsure as to whether or not you’re eligible for the tax offset, you should contact us for more information.