03 9726 4650The End of Lamington (LMITO) and What it Means for You
Lamington is coming to an end. And no, we're not referring to our Aussie iconic treats made of chocolate-coated sponge cake cubes rolled in coconut flakes.
The Low and Middle Income Tax Offset (LMITO), more commonly known as 'Lamington,' is a tax offset introduced in 2018. It was designed to provide relief for those on low and middle income brackets, helping them to reduce their taxable income and ultimately pay less tax.
Unfortunately, as of late last year, it was confirmed that the 2021-22 income year would be the final year for the LMITO to be applied to returns. That means if you're currently eligible for the Lamington, you'll want to make sure you don't miss out on maximising this offset this income year.
Are you eligible for LMITO?
To qualify for LMITO, you must be an Australian resident for income tax purposes and pay taxes on a taxable income that is below $126,000.
You don't need to do anything special when you lodge your tax return. The Australian Taxation Office (ATO) will work out whether or not you're eligible for the offset and how much it amounts to. This amount will be reflected in your notice of assessment, rather than being paid out as a separate payment.
It is important to remember, though, that the LMITO does not affect your Medicare levy and Medicare surcharge if you have any. You also wouldn't get the LMITO if you did not pay taxes during the year, as it is not a cash refund.
How much tax offset are you eligible for this income year?
The amount of tax offset you can receive is based on your taxable income. Check out the table below for the 2021-22 LMITO tax offsets from the ATO:
| Taxable income | Offset |
|---|---|
| $37,000 or less | $675 |
| From $37,001 to $48,000 | $675 plus 7.5 cents for every dollar above $37,000, up to a maximum of $1,500 |
| From $48,001 to $90,000 | $1,500 |
| From $90,001 to $126,000* | $1,500 minus 3 cents for every dollar of the amount above $90,000 |
Source: Australian Taxation Office
You can find the actual offset you were entitled to in the Less Non-Refundable Tax Offsets section of your notice of assessment once your tax return has been finalised.
What’s going to happen in the upcoming income year now that LMITO is ending?
Although you won't be able to take advantage of the LMITO for the 2022-23 income year, the Low Income Tax Offset (LITO) may still be in effect.
The ATO will automatically apply LITO after you submit your tax return next year - barring any other changes or rulings.
And similar to LMITO, the amount you will receive will depend on your taxable income. If your taxable income is:
- $37,500 or less, you will get the maximum offset of $700
- between $37,501 and $45,000, you will get $700 minus 5 cents for every $1 above $37,500
- between $45,001 and $66,667, you will get $325 minus 1.5 cents for every $1 above $45,000.
What can you do now?
At the end of this income year, the Lamington or Low and Middle Income Tax Offset (LMITO) will soon be a distant memory. So contact us today if you want help completing and submitting your tax return.