Question: Jeff, who lives in Australia, earns $45,000 a year. How much money can he get back from the government through the low and middle income tax offset?
Answer: Jeff can reduce his taxes by up to $855 with the low and middle income tax offset.
Here’s how it’s calculated for Jeff’s income:
- First, subtract $37,000 from his total income ($45,000 - $37,000 = $8,000).
- Then, calculate 7.5% of $8,000, which is $600.
- Finally, add $255 to $600. So, Jeff’s tax offset is $255 + $600 = $855.
In general:
- If you earn up to $37,000, you get a $255 tax offset.
- If you earn over $37,000 but less than $48,000, you get $255 plus an additional 7.5% of the amount over $37,000, up to a maximum of $1,080.
- If you earn between $48,000 and $90,000, you get the maximum offset of $1,080.
- If you earn between $90,000 and $126,000, the maximum offset starts to decrease by 3% of the amount over $90,000.
If you need help, contact Tax Ideas Accountants & Advisers at +61 2 83181545 or book an appointment on our live calendar.
