After the federal budget increased a tax offset originally introduced in 2018, millions of people might save hundreds of dollars on their tax bill this year.
Tushar Khanna, head of Reliable Melbourne Accountants, believes the offset will assist many individuals cope with growing living costs.
Mr. Khanna explained that whether you are entitled for the entire $1500 tax credit is determined by your taxable income which is described as follows:
- The Low and Middle Income Tax Offset (LMITO) currently reduce the tax of up to $1,080 for individuals with taxable income of up to $126,000.
- When a taxpayer files their 2021-22 tax return, the tax offset is activated.
- The LMITO is increased by $420 in 2021-22, resulting in the following proposed new rates for individuals:
- If the taxable income is $37000 or less the offset will be of $675
- If the taxable income is between $37001 and $48000 offset will be of $675 plus 7.5 cents for each dollar more than $37000 up to increase in $1500
- If the taxable income is between $48001 and $90000 the offset will be $1500
- And if the taxable income is between $90001 and $126000 the offset will be $1500 minus three cents for each dollar of the total more than $90000
Australian residents who receive the following payments or have a concession card will get a one-time $250 cost of living payment:
- Age Pension
- Carer Payment
- Disability Support Pension
- Carer Allowance
- Jobseeker Payment
- Youth Allowance
- Commonwealth Seniors Health Card Holders
- Parenting Payment
- Austudy and Abstudy Living Allowance
- Double Orphan Pension
- Farm Household Allowance
- Pensioner Concession Card (PCC) Holders
- Eligible Veterans’ Affairs Payment Recipients
- Veteran Gold Card Holders
The payments are tax-free and will not be considered income support for any income support payments reasons. A person can only receive one payment at a time.
The current fiscal year will come to an end on June 30, 2022. However, people are often encouraged by taxpayers to wait until the end of July to file their tax returns, as this allows the ATO enough time to obtain third-party data from employers, banks, government agencies, and superannuation institutions.