Low and Middle Income Tax Offset

Is your taxable income under $126,000? Act now to take advantage of LMITO.


The Low and Middle Income Tax Offset (LMITO) is a tax concession available to individual taxpayers who have a taxable income of less than $126,000. This concession is one of a range of measures being introduced over time as part of changes to the Personal Income Tax Plan.

Initially proposed as a $530 tax offset, the government upped the amount to $1,080 as a temporary (four year) stop-gap measure as it slowly phases in changes to the current tax brackets.

The end result is that many low to middle income earners may see a more modest tax refund than usual when they complete their tax returns this year.

Who is eligible?

Taxpayers with a taxable income between $48,000 and $90,000 will receive the full benefit of the offset. Those on either side of this bracket will also receive the LMITO offset, but to varying degrees. We have provided a table below as a quick visual reference to assist clients with determining their eligibility:

  Taxable Income                   Low and Middle Income Tax Offset (LMITO)             
  Under $37,000   $255
  $37,001 - $48,000   $255 plus 7.5% of the taxable income over $37,000
  $48,001 - $90,000   $1,080
  $90,001 - $126,000   $1,080 minus 3% of the taxable income over $90,000


What is the benefit?

LMITO is not taken into account when calculating the tax withheld on your salary and wages income. As a result, we anticipate that a majority of taxpayers with a taxable income under $126,000 are likely to benefit from the tax offset and potentially be due a modest tax refund.

 It is important to note that LMITO is a tax offset, rather than a refundable tax credit. It will reduce your income tax payable, but not result in a tax refund in and of itself. The taxpayers that will see the best results are those that have had tax withheld on their wages, or have access to franking credits from dividend income.

 Also of note is that LMITO does not replace the current Low Income Tax Offset (LITO), resulting in some taxpayers being eligible for both. This is a tax offset of up to $445, that slowly phases out as a taxpayer's taxable income exceeds $37,000. This tax offset phases out completely once a taxpayer's taxable income reaches $66,667.



What do I need to do? 

 If you think you may be eligible, please give us a call on 02 8848 3000 to discuss. We can do a quick estimate over the phone and help you determine what you may be entitled to.

 Take action and lodge your tax return sooner rather than later - it may result in a much more positive outcome than you anticipated!



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