Your Tax Refund…Going, Going, Gone!!
By Tina Zawila
I don’t mean to alarm anyone (particularly accountants!) but 30 June is just around the corner! And this year’s tax time is going to be very different for many Australian taxpayers.
The Low- and Middle-Income Tax Offset (LMITO), which added up to $1,500 to tax refunds in previous years, ended on 30 June 2022. For families where both taxpayers received the LMITO it will be a double-whammy with up to $3,000 wiped from their combined 2023 tax refunds compared to 2022.
If your taxable income was less than $126,000 last year you were at least entitled to some of the LMITO, if your income was between $48,001 and $90,000 you received the full $1,500, and if you earnt less than $37,000 you still received the minimum $675. As you can imagine, the loss of this Tax Offset will affect taxpayers that can least afford it – those earning ‘average’ or ‘low- and Middle-Incomes’ as the name suggested.
The beauty of the LMITO is that it was a tax cut just for the low and middle-income earners without the expense of also giving a tax cut to high-income earners. It was a clever way of giving families that were doing it tough some tax relief, and with interest rate hikes and the cost of living going up it seems a shame that it will disappear this year.
I should mention that whilst the LMITO has disappeared, the Low-Income Tax Offset (LITO) is still in play which is $700 for anyone on less than $37,000 with a sliding scale until it cuts out if your income is $66,000 or more.
So be warned, in 2023 your tax agent might give you a very different estimate of your tax refund than what you have come to expect, or you might be very disappointed when the ATO assesses your DIY return. I know many people and families count on their annual tax refunds for certain household expenses, whether it be rates, insurance or the annual service on the car, so the reduced refund could have a significant impact on the household budget.
The best you can do is ensure that you accurately prepare your income tax return and maximise your tax deductions. As qualified accountants and tax agents, we have the knowledge and experience to ask the right questions to maximise your tax refunds or minimize tax payable. I always say, I don’t cut my own hair, I go to a qualified, experienced hairdresser – why would you think you can do your own tax!? Call us today on 4972 1300 to get professional advice on your own income tax position.