Picture this: you’re a happily sipping your avocado latte, scrolling through your phone for the latest tax news. Then suddenly someone called you, and said they are getting a ridiculous low tax refund this year, you were shocked, and nearly spilled the drink on your cloth. We will talk about the Low and Middle Income Tax Offset (LMITO), and what it is about to say “up yours” to your tax refund.
Once Upon a Time in LMITO-land
In the not-so-distant past (2018-2019 to be exact), the Australian government introduced a shiny new baby called the LMITO. It was like finding extra fries at the bottom of your McDonald’s bag – a nice little bonus that made you feel like you’d won the lottery. Heck, they even spiced it up in 2021-2022 with an “extra salt” AKA a “cost of living tax offset”.
Fast forward to the present, and, well, the party’s over. The government has decided to take its ball and go home. Starting the 2022-23 tax year (1 July 2022 – 30 June 2023), no more LMITO. Ouch!
How the End of Low and Middle Income Tax Offset (LMITO) Affects You?
Think of the LMITO as that friend who always insists on paying for your bills. Now, imagine that friend has moved to another country. That’s right, folks. No more free drinks. You’re on your own, and you’re going to feel it when you’re left with a smaller tax refund at tax time.
The LMITO: A Brief Love Story
The LMITO was the government’s way of saying “we feel your pain” to low and middle income earners. It helped to balance a tax bracket creep problem that was turning into the Godzilla of Aussie taxes. But, like all good things, it had to come to an end.
So, Who Got to Sip from the Low and Middle Income Tax Offset (LMITO) Cup?
If you were an Aussie resident for tax purposes and earned less than $126,000 per year, you got to enjoy the LMITO between 2018-19 and 2021-22 of up to $1,500. But it wasn’t a cash payment. It was more like a discount or non refundable tax offset on your tax bill. And if you didn’t pay tax, well, no discount for you.
What’s Next for Your Tax Return?
For the 2022-23 income year (1 July 2022 – 30 June 2023), the LMITO is going the way of the dodo. This means your tax bill will be the full monthly, without any discount. So, brace yourselves. You’ll be paying more tax than you have in previous years, and your tax refund will be skinnier than ever. Yikes!
What’s the Deal with the Low Income Tax Offset (LITO)?
Just when you thought all hope was lost, we have some good news. The LITO is still alive and kicking, ready to lend a helping hand to those earning less than $66,667 per year. It’s not quite as generous as the LMITO, but hey, it’s something.
Wipe away those tears, because there’s nothing you can do about the end of Low and Middle Income Tax Offset(LMITO). But, don’t worry. Your tax return will automatically assess your income and apply any ATO tax offset you’re entitled to. So, keep calm and carry on. The tax world is still spinning, even without the LMITO.