Some Tax Offsets Have Expired: Are You Affected?
What is the $1,500 low and middle income tax offset (LMITO), and how will it affect my tax return in 2023?
As you may have heard through various news channels and articles, millions of Australians are due to feel a sharp increase in their taxes which will result in lower tax returns in 2023. Why? Because the generous ‘LMITO’ of up to $1,500 has expired and will not be available for the 2023 financial year. Itβs important to note that there is a difference between the low income tax offset (LITO), which is still available, and the low and middle income tax offset (LMITO), which has expired.
Overview of the low and middle income tax offset (LMITO)
The low and middle income tax offset (LMITO) is a tax benefit that has been available to eligible Australian taxpayers since 2018.
Taxpayers earning between $37,000 and $126,000 for the 2021-22 financial year could benefit from this offset for up to $1,500. However, this offset is no longer available for the 2023 financial year. In turn, this will lead to smaller tax returns for millions of individuals and sole traders compared to last year.
Overview of the low income tax offset (LITO)
The low Income Tax Offset (LITO) has been available for many years, is still available, and has not expired like the LMITO. This tax benefit will still provide some relief to those who earn less than $66,667 for the 2022-23 financial year.
Eligible taxpayers can claim the LITO when they file their tax returns. For the 2022-23 financial year, the maximum LITO amount is $700.
We certainly understand that some of our clients will greatly feel the affect of LMITO expiring. We appreciate your understanding that this change is beyond our control.
Please reach out if we can help you will your tax planning in the future. We here to assist you to get the best tax return possible.