Low Income Tax Offset

“LITO” calculations formulae for the tax years 2010 to 2015

The LITO is an “offset”, which means it is an amount subtracted from your tax payable. If the calculated LITO offset is greater than your tax payable, the excess is not refundable, and it also can’t be used to offset Medicare Levy.

The LITO is for lower income earners, and does not have to be specifically claimed, because the Tax Office automatically calculates your entitlement in your tax assessment.  (By the way, there’s a LITO calculation in our spreadsheet annual tax calculator)

LITO FORMULA 2012-2013 – and 2013-14 and 2014-15 

With effect from 1 July 2012 the full offset is $445, with a withdrawal rate of 1.5 cents per dollar of income over $37,000, such that it cuts out at $66,667.

Here’s the calculation table:

Taxable Income	LITO Offset 2012-13 2013-14 2014-15
$0 – $37,000	$445
$37,001 – $66,667	$445 – [(taxable income - $37,000) x 1.5%]
$66,667 +	Nil

 

For 2015-16 the LITO is $300 with a 1 cent per dollar withdrawal rate on incomes over $37,000

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Did You Know.. Tax Instalments Are Higher Than Necessary?

If you’re on a lower income, the Tax Instalment tables don’t take the full LITO into account. For 2012-13 it’s only 18% of the entitlement in each pay calculation, and by 2015-16 it will be gone altogether. This means if you are a wage earner and eligible for LITO, the Tax Office gets a free loan of your money while you wait until your annual tax assessment to get the money back. The details of this under-publicised tax sting are here.

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2011-2012 Low Income Tax Offset “LITO” Formula 

The Low Income Offset is available when your taxable income is less than $67,500 in the 2011-2012 tax year. The low income tax offset amount reduces at a rate of 4 cents per dollar of your income over $30,000.

The full Low Income Tax Offset is $1,500 in 2011-2012.

Taxable Income	LITO Offset 2011-12
0 – $30,000	$1,500
$30,001 – $67,500	$1,500 – [(taxable income - $30,000) x 4%]
$67,500 +	Nil

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2010-2011 Low Income Tax Offset “LITO” Formula 

The Low Income Offset is available when your taxable income is less than $67,500 in 2011. The low income tax offset amount reduces at a rate of 4 cents per dollar of income over $30,000.

The full Low Income Tax Offset is $1,500 in 2010-2011.

Taxable Income	LITO Offset 2010-11
0 – $30,000	$1,500
$30,001 – $67,500	$1,500 – [(taxable income - $30,000) x 4%]
$67,500 +	Nil

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2009-2010 Low Income Tax Offset “LITO” Formula 

The Low Income Offset is available when your taxable income is less than $63,750 for the 2010 financial. The low income tax offset amount reduces at a rate of 4 cents in the dollar, for every dollar of income over $30,000.

The full Low Income Tax Offset is $1,350 in 2009-2010.

Taxable Income	LITO Offset 2009-10
0 – $30,000	$1,350
$30,001 – $63,750	$1,350 – [(taxable income - $30,000) x 4%]
$63,750 +	Nil

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