The End of the Low and Middle Income Tax Offset (LMITO)

By H&R Block 3 min read
Caution! Your tax refund might be far smaller than you’re expecting this year.

With interest rates still on an upward trajectory, the price of fuel heading for record highs, electricity and gas prices skyrocketing and the cost of basic foods going up, many people will be relying on their tax refund to provide some much-needed relief from the cost of living. 

But they could be disappointed. The government has made a major change to the tax system this year which will pile downward pressure on the size of your refund come tax time. In short, they have abolished the Low and Middle Income Tax Offset. 

This tax offset, which delivered a tax break of up to $1,500 for people earning up to $126,000, actually expired at the end of the last tax year, on 30 June 2022. Many taxpayers won’t cotton on to that fact until they come to lodge this year’s tax return and they notice that the size of their refund has dramatically shrunk! 

As a reminder, the LMITO was around for several years and provided a tax offset if you were a low or middle income taxpayer, classified as anybody with a taxable income of up to $126,000. The amount of the offset varied depending on your income; if you earned less than $37,000, you received $675 and if your income was between $37,001 and $48,000, the tax offset increased steadily to $1,500. Between $48,000 and $90,000, you got the maximum of $1,500. Earn more than $90,000, and the offset gradually phased out, disappearing after $126,000.

As a result of its abolition, low-to-middle income earners may see their tax refunds reduced this year by between $675 and $1,500. 

Talk to H&R Block to see what you can do to get the size of your refund back up again by simply claiming all the deductions you are legally entitled to.

Still have questions? 

We have the answers. Let us take care of you and your tax needs.

Book an appointment online today

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