How is LMITO calculated?
Scenario:
Given that my (an Australian resident) taxable income is $45,000, how much am I entitled to low and middle income tax offset?
Calculation:
You are entitled to it and your tax payable can be reduced by up to $855 using the low and middle income tax offset.
As your income is between $30,000 and $48,000, you are eligible to a low and middle income tax offset amount of $255 plus 7.5% of your income amount above $37,000. That is:
• $45,000 − $37,000 = $8,000
• 7.5% × $8,000 = $600
• $255 + $600 = $855
If your taxable income:
• does not exceed $37,000, you will be entitled to an offset amount of $255 on your tax payable.
• exceeds $37,000 but is not more than $48,000, you will be entitled to an offset amount of $255, plus 7.5% of the excess above $37,000 to a maximum offset of $1,080 on your tax payable.
• exceeds $48,000 but is not more than $90,000, you will be entitled to the maximum offset amount of $1,080 on your tax payable.
• exceeds $90,000 but is not more than $126,000, you will be entitled to an offset amount $1,080 less 3% of your taxable income above $90,000.