With recent interest rate rises and the cost of living on the increase we are witnessing the effect it is having on taxpayers.

In our experience many taxpayers rely on tax refunds as forced savings to assist with covering the cost of living.

Unfortunately, a blow to taxpayers this year has been the removal of the Low to Middle Income Tax Offset (LMITO). LMITO was a temporary tax benefit introduced and available for the 2018-19 to 2021-22 income years, but was discontinued as of 30th June 2022.

LMITO was an offset for those earning between $37,000 to $126,000 and meant eligibility for a tax cut of up to $1,500 (for those earning less than $37,000 the maximum offset was $675).

When lodging your return if you were eligible for the offset it would be factored into your tax result as a refundable offset.

Ceasing of this offset as at the tax year ended 2022 has resulted in some refunds being lower this tax year 2023 by the $1,500.

Whilst your income may be similar to last year the removal of the $1,500 LMITO is one of the reasons refunds are lower or there is an amount payable.

Unfortunately, many taxpayers are being affected for 2023 by the removal of this government offset.

As tax agents, we have been the bad news fairies to explain why refunds are less than they have been in the past.  This has been difficult as we too understand the pressures of the interest rate increases and the cost of living.

If we can offer some good news, the best way to counter-balance this drop in your tax refund is by ensuring you claim all the tax deductions you deserve along with keeping your receipts to make sure your claims aren’t disallowed.

Please reach to our team out if you need assistance by calling 07 5494 9173.