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2020/21 Federal Budget

2020/21 Federal Budget

1. Personal income tax changes

1.2 Changes to the Low Income Tax Offset (‘LITO’)

The Government announced that it will also bring forward the changes that were proposed to the LITO from 1 July 2022, so that they will now apply from 1 July 2020 (i.e., from the 2021 income year), as follows:

  • The maximum LITO will be increased from $445 to $700.
  • The increased (maximum) LITO will be reduced at a rate of 5 cents per dollar, for taxable incomes between $37,500 and $45,000.
  • The LITO will be reduced at a rate of 5 cents per dollar, for taxable incomes between $45,000 and $66,667.
Current LITO (2021 to 2022)Proposed LITO (2021 to 2022)
$0 – $37,000Up to $445$0 – $37,500Up to $700
$37,001 – $66,666$445 – 1.5% of excess over $37,000$37,501 – $45,000$700 5% of excess over $37,500
$66,667 +Nil$45,001 to $66,666$325 1.5% of

excess over $45,000

$66,667 +Nil

Note that, the Government also announced that the current Low and Middle Income Tax Offset (‘LAMITO’) would continue to apply for the 2021 income year (which is available in addition to the LITO for eligible taxpayers). For example, the maximum LAMITO of $1,080 will be available to taxpayers with taxable incomes of between $48,000 and $90,000 in the 2021 income year.

 

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