• New Wave Accountants

4 Common Income Tax Offsets and Rebates in Australia

Tax season is one of the most stressful times of the year, so you naturally start to think about tax deductions—the tax breaks that will lower your overall tax bill.

Tax offsets and rebates directly reduce the tax payable on your taxable income, and they are applied last. In other words, they are not the same as tax deductions. Each dollar of a tax offset reduces your tax payable by one dollar, regardless of your taxable income.

To receive a tax offset, you must meet certain requirements that the ATO sets. The tax offset will not reduce your Medicare Levy and Medicare Levy Surcharge. The Medicare levy is two per cent of the amount of your taxable income that you pay for Medicare and the tax you pay on your taxable income.

1. Low- to Middle-Income Tax Offsets (LMITO)

If you are a low, or low and middle-income earner, you may be eligible for the low-income tax offset and the low and middle-income tax offset (LMITO). You will not need to fill out any section on your tax return; these amounts will be automatically added to your tax return. They will be included with your calculated tax liability, and you will see them reflected in your tax assessment. These amounts will not be paid separately.

On 29 March 2022, the government announced a proposal to increase the low- and middle-income tax offset. The LMITO will increase from $445 to $675, and the amount will be available to those earning no more than $37,000 a year. The announcement confirmed that the tax break would end after that year.

2. Seniors and Pensioners Tax Offset (SAPTO)

If you pass the SAPTO qualification criteria or reach the Veteran pension age with Centrelink, your tax liability will be reduced. The SAPTO tax offset is reduced from your taxable income if it falls below the minimum taxable income threshold. The SAPTO tax offset is non-refundable.

3. Australian Super Income Stream Tax Offset

If you receive income from an Australian pension income stream, you may be eligible for a tax offset equal to $1,500 if this income is taxed or $1,000 if this income is considered untaxed. The limit has been set to $10,000 per person.

Unless you are receiving a super benefit from a personal injury, the income from these benefits will not be eligible for this particular tax offset, as they do not qualify for the taxed element of this offset. You cannot claim this offset unless you were age 60 or over when you died.

4. Zone and Overseas Forces Tax Offset

If you live in a remote area or serve overseas, you might be eligible for a tax offset. The tax offset amount depends on your circumstances, such as where you live or work.

To qualify for the zone tax offset, you must be living in a specified remote or isolated area from 1 July 2015 for 183 days in a row, plus other conditions. For the overseas tax offset, you must have served in a specified overseas locality for 183 days and are a member of either the Australian Defence Force or the United Nations Armed Force.


Income tax is one of the major expenses you will have to pay if you make a living. If you didn’t know it, the government offers you numerous tax deductions to help you save more money. The examples we have given you here are not the only ones you can claim.

New Wave Accounting provides end-to-end accounting and bookkeeping services. We are tax accountants on the Gold Coast, working for various industries and creating tailored solutions for every client. We understand how individuals and businesses need reliable accounting and bookkeeping services, and so we’re here to help. Call us at (07) 55041999 to schedule an appointment today!

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