Tax Offsets

Tax offsets directly reduce tax payable. In contrast, a tax deduction is an amount subtracted from taxable income, which only reduces tax payable by your marginal tax rate percentage.

A tax offset may result in no tax being payable. In some cases, a refund may be available.

Can a tax offset be refunded?

If an offset value is higher than the tax otherwise payable, only some tax offset rules allow a refund of the difference. Franking credits are one such example of a refundable tax offset, and the Health Insurance tax offset is another.

Other refundable tax offsets

Other refundable tax offsets are listed here: Refundable offsets.

How to get a tax offset

Some tax offsets are provided (or applied) automatically at the time of tax assessment, based on contents of your tax return and other information already available to the Tax Office.

The low income, and low and middle income tax offsets, are automatically calculated and applied based on your level of income.

Other offsets may need to be specifically applied for, or require specific information to be provided in your tax return based on your entitlement. Franking credits and the Zone Tax Offset are such examples.

Check carefully to avoid missing out

Offset claims can be easily overlooked if you are not working from a checklist when preparing your tax return, or completing questions in sequence.

The best way to avoid overlooking a tax offset claim is to methodically consider and answer every question when completing a tax return.

Using tax software such as the myTax app can help in this regard.

Using a tax return checklist can also help as an additional measure to avoid oversights.

Adjusted taxable income

Some tax offsets are only available after meeting an income test. The “income” being measured for this purpose may simply be taxable income. Some tax offsets require the income calculation be adjusted by other amounts. See: Adjusted Taxable Income For Offsets Calculations.