Low Income Tax Offset

“LITO” calculation formulae for the tax years to 30 June 2022*

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).

Under Budget 2018 proposals, from 1 July 2018 to 30 June 2022 the LITO applies in addition to LMITO. From 1 July 2022 a new LITO will apply (see notes below).

LITO calculation table from 1 July 2012 to 30 June 2022*

Taxable IncomeLITO Formula (to 30 June 2022)*
$0 – $37,000$445
$37,001 – $66,667$445 – [(taxable income – $37,000) x 1.5%]
$66,667 +Nil

*Budget News 8 May 2018: Announced in the budget measures on 8 May 2018 and included in the proposals for changes to the personal tax rates schedules is a new Low and Middle Income Tax Offset (LMITO) which will operate from 1 July 2018 until 30 June 2022 in addition to the existing Low Income Tax Offset (LITO).

Under the proposals from 1 July 2022 a new low income offset of up to $645 will replace both LITO and LMITO.


*New LITO to apply from 1 July 2022

Taxable IncomeLITO Formula from 1 July 2022
$0 to $37,000$645
$37,001 to $41,000$645 – [(taxable income – $37,000) x 6.5%]
$41,001 to $66,667$385 – [(taxable income -$41,000 x 1.5%]
over $66,667nil

* These proposals are at the time of writing, subject to legislation being passed.


LITO calculations from 1 July 2012

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.  A previously legislated LITO offset value of $300 (with a withdrawal rate of 1 cent per dollar of income over $37,000 cutting  out at $67,000) was to take effect from 1 July 2015 under measures originally introduced with the Carbon Tax. This has since been repealed.


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 IncomeLITO 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 IncomeLITO 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 IncomeLITO 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

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This page was last modified 2018-05-10