Tax Offsets

Tax offsets are amounts subtracted directly from your tax payable. Some are listed below. Tax offsets may also be referred to as tax rebates.

• Beneficiary Tax Offset
• Delayed Income Tax Offset (income in arrears)
• Digital Games Tax Offset
• Dependant Spouse Offset
• Invalid and Carer Tax Offset (“DICTO”)
• Education Tax Refund/Rebate
• Entrepreneurs Tax Offset
• Foreign Income Tax Offset
• Franking Credits
• Health Insurance Tax Offset
• Low and Middle Income Tax Offset (LMITO)
• Low Income Tax Offset (LITO)
• Low Income Superannuation Tax Offset (“LISTO”)
• Lump Sum Payment In Arrears Tax Offset
• Mature Age Workers Tax Offset
• Medical Expenses Tax Offset
• Seniors and Pensioners Tax Offset (“SAPTO”)
• School Kids Bonus (for reference only)
• Small Business Tax Discount (Offset)
• Sole Parent Rebate
• Spouse Super Contributions Tax Offset
• Zone Tax Offset

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 (subject to conditions).

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.

This page was last modified 2021-06-30