After being extended twice because of the pandemic, the low- and middle-income tax credit will be given out for the last time.
More than 10 million Australians will get tax breaks of up to $1500. Find out how much you’ll get here.
Millions of Australians will get tax breaks worth up to $1500 before they are phased out.
But experts say there’s a case for renewing the program in some way, since the cost of living doesn’t look like it’s going to slow down.
The former Coalition government started the Low and Middle Income Tax Offset (LMITO) in 2018.
It was only supposed to be paid out once, but because of the pandemic, it was extended twice.
The budget for this year, which was released in March, made it clear that it would not be extended for a third year.
But because the cost of living went up, it was raised by $420.
How much do I get?
- Those who make less than $37,000 get an extra $675 taken off their tax returns.
- People who make between $37,001 and $48,000 get between $675 and $1500.
- Those who make between $48,001 and $90,000 get the most money back, which is $1500.
- Those who make between $90,001 and $126,000 get $1500 minus three cents for every dollar over $90,001.
- Those who make more than $126,000 will not get any offset.
How do I get it?
LMITO is automatically added to a taxpayer’s return if they fall into one of the eligible tax brackets.
“You have to send in your tax return. Mark Chapman, who is in charge of tax communications at H&R Block, says, “If you don’t do that, you won’t get the offset.”
“But that’s it, it’s just a reason for people to register and, in a way, a reason to register early.”
It is thought that more than 10 million people will be able to get the offset.
Why are we getting rid of it?
LMITO was first proposed as a way to get to stage three tax cuts that were written into law.
The 37% tax bracket has been taken out of the new tax system.
So, everyone who makes between $45,000 and $200,000 pays the same 30 percent tax rate.
Even though stage three cuts will help Australians at the bottom of the pay scale, they will get less than they do under LMITO.
Higher-income workers, on the other hand, get a lot out of the cuts. Under LMITO, anyone making more than $126,000 got nothing.
Chapman said it wasn’t impossible that Labor would propose a change to the system in its first budget, which will be released later this year.
“There are no laws that say it will be around in 2023. But, having said that, that law was made by the Coalition government that came before. So, it’s not clear if, when the Labor government releases its budget in October, there will be something to either keep the offset or replace it with something that has a similar effect.
Prime Minister Anthony Albanese said he had no plans to stop the third stage of tax cuts from happening.
He told Sky News, “We’ve been very clear about what our plans are.”
“People should be able to count on the tax cuts that have been written into law, and the Medicare levy and the NDIS levy are already in place.”
We’re not going to change them. We want that certainty going forward.”