Tax and Structures


Individual taxation

Rebates

The gross tax payable may also be reduced by certain tax credits (also known as rebates), such as:

  • low income tax offset
  • low and middle income tax offset
  • spouse contribution tax offset
  • pension and annuity tax offset
  • senior and pensioner tax offset
  • private health insurance rebate
  • dividend franking credits
  • foreign tax credits.

The low income tax offset and low and middle income tax offset are briefly described below.

Eligibility for the low income tax offset (LITO) depends upon the level of taxable income. The maximum tax offset of $700 will apply if taxable income is $37,500 or less. This amount is reduced by 5 cents for each dollar between taxable incomes of $37,500 and $45,000, and then reduced by a further 1.5 cents for each dollar of taxable incomes between $45,001 and $66,667. The offset cuts out once taxable income exceeds $66,667.

Eligibility for the low and middle income tax offset (LMITO) also depends upon the level of taxable income. These thresholds apply for the 2021/22 financial year.

Rates for the Low & Middle Income Tax Offset are as follows:

Taxable income 

Maximum size of tax offset

$0-$37,000

$255

$37,001-$48,000

$255 plus 7.5% of the amount in excess of $37,000, up to a maximum total of $1,080

$48,001-$90,000

$1,080

$90,001-$126,000

$1,080 minus 3% of the amount in excess of $90,000

Entitlement to the LMITO ceases once your taxable income exceeds $126,000.

To recap on our example of Fred, we’ve calculated Fred’s assessable income and his ultimate tax payable in the table opposite.