Low Income Tax Offset

 

“LITO” calculation formulae for the tax years 2010 to 2016

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.  (The LITO calculation is provided for in the spreadsheet annual tax calculator).

2012-13, 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.    

LITO calculation table 1 July 2012 to 30 June 2015

>

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

 


LITO calculation table 1 July 2015 to 30 June 2016

With effect from 1 July 2015 the full offset is $300, with a withdrawal rate of 1 cent per dollar of income over $37,000, such that it cuts out at $67,000. (1)

Taxable Income LITO Formula 2015-16
$0 – $37,000 $300
$37,001 – $67,000 $300 – [(taxable income - $37,000) x 1%]
$67,000 + Nil

(1) In measures associated with the repeal of the carbon tax and consequent removal of 2015-16 tax cuts, the government’s intention is to restore LITO to $445 with a 1.5 cent withdrawal rate from the 2015-16 year. More about this here.


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.


2011-2012 Low Income Tax Offset

For 2011-12 the full offset is $1,500, with a withdrawal rate of 4 cents per dollar of income over $30,000, such that it cuts out at $67,500.

LITO calculation table 1 July 2011 to 30 June 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


2010-2011 Low Income Tax Offset

From 1 July 2010 the full offset is $1,500, with a withdrawal rate of 4 cents per dollar of income over $30,000, such that it cuts out at $67,500.

LITO calculation table 1 July 2010 to 30 June 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

2009-2010 Low Income Tax Offset

For 2009-10 the full offset is $1,350 with a withdrawal rate of 4 cents per dollar of income over $30,000, such that it cuts out at $63,750.

LITO calculation table 1 July 2009 to 30 June 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

 

See also

.

This page was last modified on 16 July 2014