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How To Claim Tax Offset Up To $2160? What Are The Income Parameters For It?

How To Claim Tax Offset Up To $2160? What Are The Income Parameters For It?

How Covid-19 has battered the economy, isn’t hidden from all of us. All are well-acquainted with this hard-hitting situation that has introduced us with a depressing recession time. Therefore, the Australian government is striving hard to help people with lots of initiatives, and Tax Offset is one of them.

Owing to claim Tax Offset, which is around $1080 per annum for singles & $2160 for couples, people are rushing to file tax before time as more and more people are anticipating claiming tax refunds.

However, the government is initiating such steps to bring monetary flow into the Australian economy again. In this way, workers will get some amount to spend, and that incurred expense will turn into someone’s income.

Such steps may help Australia come out from the recession by introducing a significant boost to the Australian economy through supporting jobs.

Around ten million Australians will get the benefit of it and approx. Half of those workers will get at least $1080. But only if they have lodged tax returns this year.

According to treasurer Josh Frydenberg, “ it will give a big boost to people’s budget as they can keep more out of their earning.”

Since the government has introduced low class and middle-class offset ( $1080 for singles and $2160 for couples), millions of Australians are standing in the queue to benefit from this opportunity.

Nearly 991,000 people have visited ATO for lodgment, which is 11% more than the previous year. But only workers who earn less than $126,000 in a year are eligible for the claim. This limit also varies because workers can also secure $255 if their taxable income is up to $37000.

Any worker who earns between $48,000 to $90,000 is eligible for maximum offset- $1080. While workers who earn more than $90,000  but less than $126,000 are also eligible for offset, but they’ll get a refund in the minimum amount.

Mr. Frydenberg mentions that this cut in tax is one of the best options in the wake of Coronavirus, which is likely to create possibilities for people to purchase things easily. It’ll boost spending, which is essential for the Australian economy.

Now you are well-acquainted with the tax offset, which income group is eligible for this tax refund policy. No wonder, the Australian government is following the best approaches to boost consumption, aggregate demand, and money flow in the market through such steps.

Proposed changes for personal tax offsets

A new non-refundable personal tax offset is due to commence from 1 July 2018, in accordance with legislation passed in June 2018 (TLA (Personal Income Tax Plan) Act 2018).

The Low and Middle Income Tax Offset, or LAMITO, provides taxpayers under $125,333 in taxable income between $0 and $530 in additional tax offsets. The base amount of $200 is available to low income earners for the life of the offset, which is four years. After the four years, the LAMITO base of $200 will be absorbed into the current Low Income Tax Offset.

Proposed changes

The proposed changes to LAMITO come from the 2019 federal budget announcement. The announcement has been described as part of a package of three changes, titled “Building on the Personal Income Tax Plan” (Budget Paper No. 2, p 17).

The table of the current law next to the proposed changes, as it relates to the 2018/19 and following income years, is below:


Taxable income Current law Proposed law
Less than $37,000$200$255
Between $37,000 and $48,000Increase 3c per $1,

capped at $530

Increase 7.5c per $1,

capped at $1,080

Between $48,000 and $90,000Maximum $530Maximum $1,080
Between $90,000 and $126,000Reducing from

maximum at 1.5c per $1

Reducing from

maximum at 3c per $1

Above $126,000$0$0

In both scenarios, taxpayers between $48,000 and $66,667 will have a reduced Low Income Tax Offset with the maximum level of LAMITO.

LAMITO available until 2021/22 income year

The proposed changes announced in the 2019 federal budget only increase the base rate and maximum level of non-refundable offset. There has been no announced change to the length of time the offset is available, which is four years from 2018/19 to 2021/22 financial years.

Beginning with the 2022/23 financial year, the base rate of LAMITO is due to be absorbed with the Low Income Tax Offset. Also announced as part of the overall income tax package, the low income tax offset will increase from $645 to $700 (being the LAMITO change). Further changes to personal tax rates have also been proposed from 2022/23 to 2024/25 income years.

Client opportunities

Where clients are requesting information surrounding these proposed changes, and their effect on their tax bill, the following practical tools will be made available:

Worked example: Finding the franking credits sweet spot for the 2018/19 income year

Calculator: How the LAMITO change will look based on taxable income for the 2018/19 income year (coming soon)


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