When you lodge a tax return you are liable to claim deductions for work-related expenses. This guide will help you understand all tax offsets in Australia. Apart from this, we’ll discuss how these tax offsets work and their benefits if you are eligible. Let’s get started:

What is a Tax Offset?

When it’s tax time, you may have heard about tax offsets. A tax offset minimises the tax you pay on your taxable income, which is called your tax payable. The amount of tax offset you get is based on:

  • your taxable income
  • the amount of tax you have to pay.

You don’t receive any offset if you don’t pay any tax. Most offsets can’t be refunded, which means they are not able to minimise your tax below zero. However, some are refundable. When you file your tax return, the ATO works out some tax offsets automatically.

  • Low and Middle-Income Earner Tax Offsets

You need to check eligibility for the low-income tax offset or low and middle-income tax offset in the 2019 to 2022 income years.

1. Low-income tax offset (LITO)

The amount you get on the low-income tax offset (LITO) will be based on your taxable income.

  • you will get the maximum offset of $700 if you earned $37,500 or less
  • you’ll get $700 minus 5 cents for every $1 over $37,500 if you earned between $37,501 and $45,000
  • you’ll receive $325 minus 1.5 cents for every $1 over $45,000 if you earned between $45,001 and $66,667

    2. Low and middle-income tax offset (LMITO)

On 30 June 2022, LMITO ended. For the 2022-23 income year and later income years, LMITO is not available. You may not be aware of these types of updates, hence you can ask tax return accountants as they keep themselves updated with these new rules and regulations. In case your taxable income is less than $126,000, you receive LMITO. For tax purposes, you need to be an Australian resident. If your taxable income is $126,000 or above, then you’ll not get LMITO.

  • Seniors and pensioners tax offset

To qualify for the seniors and pensioners tax offset you need to:

  • be eligible for an Australian Government pension or allowance
  • meet income limits for you and your partner.

The offset can minimise the amount of income tax you need to pay. The ATO will apply the non-refundable offset when they check your tax return. When you choose accounting in Melbourne, then accountants can keep you updated with these types of laws.

  • Superannuation-related tax offsets

You need to check whether you can claim a superannuation-related tax offset for you or your partner.

  • Superannuation income stream tax offset

A super income stream is a collection of regular payments from your super fund. If you get income from an Australian super income stream, you may qualify for a tax offset equal to:

  • 15% of the taxed element
  • 10% of the untaxed element.
  • Tax offset for super contributions on behalf of your partner

You may be eligible to claim a tax offset if you make a super contribution on your partner’s behalf. They are required to earn under $40,000 or not work.

  • Low-income super tax offset

If you earn $37,000 or below per year, you may qualify to receive a low-income super tax offset. Various accounting firms in Melbourne know each and everything about new tax laws, so you can seek help from them.

  • Veterans’ super tax offset

The veterans’ superannuation tax offset is a non-refundable tax offset. It ensures veterans and their beneficiaries don’t pay more tax because of the decision by the Douglas court.

  • Beneficiary tax offset

You must be receiving some Australian government allowances and payments and pay tax to get the beneficiary tax offset.

  • Private health insurance offset

You need to have private health insurance to claim the private health insurance offset. It is also known as the private health insurance rebate.

  • Maintaining an invalid or invalid carer tax offset

You may qualify to claim a tax offset if you maintain an invalid or invalid carer. The invalid or carer needs to be both: 16 years old or above, receiving certain government payments.

  • Overseas and zone forces tax offsets

The zone tax offset is for those who are residents of either:

  • specified remote locations
  • isolated areas of Australia.

On the other hand, you may qualify for an overseas forces tax offset if:

  1. you are a member of either
  • the Australian Defence Force
  • a United Nations Armed Force
  1. you work in a particular overseas locality
  2. your income is not exempt from tax (relating to that service).
  • Lump sum payment in arrears tax offsets

You may qualify for lump sum tax offsets if you get a lump sum payment in arrears. A lump sum payment is taxable you get it but it is for an earlier income year.

  • Claiming a foreign income tax offset

You may qualify to claim a foreign income tax offset and it prevents you from paying double tax on your foreign and worldwide income.


The blog highlights everything about tax offsets and available tax offsets that you can claim. For more information on tax offset, you can reach Reliable Melbourne Accountants.