The Government has announced an increase of $420 in the “low and middle income tax offset” for the 2021-22 income year but no changes to the personal income tax rates.
Low and Middle Income Tax Offset
In a measure designed to ease cost of living pressures, the Government will increase the low and middle income tax offset (LMITO) by $420 for each eligible recipient for the 2021-22 income year. This will increase the maximum LMITO benefit for 2021–22 to $1,500 for individuals and $3,000 for couples. Taxpayers will be able to access the increased LMITO from 1 July 2022 when they lodge their tax returns for the 2021–22 income year.
With the exception of those who do not need the full offset to reduce their tax liability to zero, all LMITO recipients will benefit from the full increase of $420. All other features of the LMITO will remain unchanged. Consistent with the LMITO’s current features, taxpayers with incomes of $126,000 or more will not benefit from the additional $420 tax offset.
Importantly, the Government did not announce an extension of the LMITO to the 2022-23 income year and it will therefore cease in full after 2021-22.
Personal tax rates
There have been no changes to the personal income tax rates for the 2021-22 income year or for subsequent years. The proposed changes in tax rates from previous budgets are contained in the following table.
Tax rates, thresholds
Rate |
Tax payable |
2022–23 |
2024–25 |
|---|---|---|---|
0% |
Nil |
$0 – $18,200 |
$0 – $18,200 |
19% |
Nil |
$18,201 – $45,000 |
$18,201 – $45,000 |
30% |
N/A |
$45,001 – $200,000 |
|
32.5% |
$5,092 |
$45,001 – $120,000 |
N/A |
37% |
$29,467 |
$120,001 – $180,000 |
N/A |
45% |
$51,667 |
$180,001 |
$200,001 |
One-off $250 cost of living payment
The Government will make a one-off $250 payment in April 2022 to 6 million eligible pensioners, welfare recipients, veterans and eligible concession card holders. The payment will be tax exempt and will not count as income for the purposes of any Government income support.
Medicare levy low-income thresholds
For the 2021–22 income year, the Medicare levy low income threshold for singles will be increased to $23,365 (up from $23,226). For couples with no children, the family income threshold will be increased to $39,402 (up from $39,167). For each dependent child or student, the family income threshold will increase by $3,619 (up from $3,597). For single seniors and pensioners eligible for the seniors and pensioners tax offset, the Medicare levy low income threshold will be increased to $36,925 (up from $36,705). The family threshold for seniors and pensioners will be increased to $51,401 (up from $51,094).
