Will you receive an extra $1,080 back this tax season?

Friday, 12th July 2019

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With the Government's recently announced changes to the Low &amp; Middle Income Tax Offsets, there are some great changes coming to your tax return this year, and years to come. Effective immediately are tax offsets of up to $1,080 for individuals, but how much are you entitled to get, and what do you really get? Let's break it down. Who gets what? The changes were specifically targeted at Low &amp; Middle Income earners, which typically covers everyone earning under $126,000 (and above the tax free threshold). Here's a quick look at how the different tax brackets are affected: If you earned between $48,000 and $90,000 in 2018-19, you will receive the full $1,080 offset. Winning! If you earned less than $48,000, you&rsquo;ll receive $255 plus 7.5% of every dollar you earned over $37,000. If you earned between $90,000 and $126,000, you'll receive $1,080 less 3% of every dollar over $90,000.&nbsp; Still confused? You&rsquo;re not alone, it's a tricky one to understand. Here&rsquo;s a few examples for you. Joe earned $42,000 this year. He is entitled to the base $255 offset, plus another $375, which is 7.5% of $5,000 (the amount he is over $37,000). In total, Joe&rsquo;s entitled to a $630 offset.&nbsp; Melissa earned $102,000, which is $12,000 over the $90,000 threshold. She is entitled to $1,080 less $360 (3% of $12,000), for a total offset of $720. Is an offset a cash-back? In short no. This offset can only reduce your tax payable, It does not reduce the Medicare Levy. What do these changes mean for your return? Whatever the offset you&rsquo;re entitled to, it will affect your final tax refund. If you were previously going to get a refund, the offset would boost the amount you get. That means you could have an extra $1,080 in your pocket. If you were going to get a bill from the government of (for argument's sake) $500, then the full offset of $1,080 would get you a return of $580.Starting to get a little excited now, aren't you? What if I have already done my return? Don&rsquo;t worry, the ATO will automatically amend your return &ndash; you won't have to do anything. Does it affect the Medicare Levy? No, you still have to pay the Medicare Levy. Has the Low Income Offset been changed? No, if you were entitled to the Low Income Offset, you will still receive it. What&rsquo;s the fastest and best way to claim your tax offset? Despite what people think, you will not get your return any faster using the government's myTax platform. In fact, not only can your ITP consultant get your return quickly - unlike DIY platforms, we'll make sure you get everything you're entitled to. If you miss any deductions that you're entitled to claim, you're effectively giving some of your great tax relief back to the government, and that's just crazy. Speak to an ITP tax professional about getting your Maximum Return this tax season. Book an appointment today or give us a call on 1300 555 773 to speak to a tax professional.