Find Low Income Tax Offsets in Australia

Living on a low income in Australia gives you the benefit of receiving tax credits, most often referred to as tax offsets or rebates. If you are a low income earner there are a number of these tax offsets that can help you reclaim a portion of the tax you have had to pay. These are listed below to help you maximize your tax savings in Australia and put more money in your pocket.

Low Income Tax Offset (LITO)
Not the same as a rebate, this offset lowers your taxes due, to zero if you earn a low enough income and receive the maximum benefit. The LITO affects anyone earning up to $66,647 a year, but benefits those under $30,000 the most. For every dollar over $37,000 the benefit is reduced by 1.5c. The most recent tax rates mean if you earn under $18,000 in Australia, where there is no tax payable, you would not benefit from LITO. The maximum benefit of LITO is $445. This benefit is automatically calculated when you submit your tax return.

Beneficiary Tax Offset
Another beneficial tax offset for those low income earners that only receive income through government benefit programs, this offset allows those individuals to pay zero tax. This zero tax rate is only if you only receive government benefits and allowances without any other sources of income. If you have other income within the tax year, you may have to pay some tax.

 
Family Tax Benefit
Unlike the other two offsets just mentioned the FTB offers an actual payment from the government to families with children and dependents. This benefit is separated into two main categories, FTB-A and FTB-B. FTB-A is meant for families with two incomes. The benefit is calculated based on your income, number of children and how old they are. The FTB-B is meant to help single parent families and one income families cope with the extra burden of raising a family. The maximum benefit range is $1945 to $5818 but can vary significantly based on your family details. To claim your FTB, you can apply online, provide supporting documentation and receive your payments automatically.

Health Insurance Tax Offset
You can claim a Health Insurance tax offset for private insurance and medical expenses based on your income. The offset if based on your income and will be calculated by the government upon submittal of your tax return. This offset can be claimed as a premium reduction with your insurance provider or a refundable tax offset through your tax return. The Medicare tax offset was phased out and the last collectible year was 2014-2015 tax year and only if you had received the benefit for the last two years.

Seniors Super Tax Offset
If you are a senior living off a superannuation, there are two potential tax offsets you can claim because of your generally lower income. The first is the Australian super income stream tax offset which is 15% off the untaxed element or 10% off the taxed element of your super. The second offset is a spousal contribution offset.

 
If you are a low income earner in Australia, the best part is that income under $18,000 is not taxable and up to about $30,000 there are a number of offsets to claim to help you with your tax burden. If you need help in understanding tax credits and how they work, reach out to a free financial counsellor or consult with your accountant.