Farewell to the Low & Middle Income Tax Offset (LMITO)
- Arnold Shields
- Sep 15, 2023
- 2 min read
Updated: May 14
Goodbye LMITO: What It Means for You
Australians have become quite familiar with the Low and Middle Income Tax Offset, better known as LMITO. Introduced in the 2018–2019 Federal Budget, it was a welcome tax rebate designed to ease pressure on those earning between $48,000 and $90,000 annually. But from 1 July 2023, this temporary measure has officially ended.
What Was LMITO?
LMITO was a targeted tax offset that provided up to $1,080 in tax relief to eligible Australians. For those earning under $48,000, the offset gradually decreased, still offering some benefit to low-income earners. Its primary goal was to boost the economy by increasing household spending capacity.
Why Was It Introduced?
The government introduced LMITO to support Australians during tough economic times. It aimed to:
Reduce the tax burden on everyday workers
Increase disposable income
Stimulate spending and economic activity
The Financial Impact of LMITO
During its lifetime, LMITO gave millions of Australians a welcome boost in their annual tax returns. The offset helped cover rising living costs, and for many, it meant the difference between owing tax and receiving a refund. But now that it’s gone, affected taxpayers are seeing the difference.
What Happens Now That LMITO Is Gone?
As of 1 July 2023, LMITO has been completely phased out. Taxpayers in the $48,000–$90,000 bracket no longer receive this offset, and will instead be taxed according to standard thresholds without that additional rebate.
Here’s what to expect:
Reduced tax refunds (or even unexpected tax bills)
Higher effective tax rates for middle-income earners
Lower take-home pay if PAYG withholding hasn't adjusted accordingly
But It’s Not All Bad News
The end of LMITO comes alongside other updates to income tax brackets and thresholds. These structural tax changes may offset some of the losses, depending on your income level. However, not everyone will be better off.
What Should You Do Now?
Taxation rules are always evolving. If you’re unsure how these changes affect you, speak to a qualified tax agent. At Dolman Bateman, we help individuals and families navigate tax law with confidence and clarity.
Tips to manage the change:
Review your PAYG withholding to avoid surprises
Plan for a smaller refund (or no refund) in 2024
Keep accurate records to maximise other deductions
Get professional advice to adjust your strategy
Stay Ahead of Tax Changes
The end of LMITO is a clear example of how government policy can directly impact your financial position. If you’re feeling uncertain, don’t go it alone.
Let Dolman Bateman help you understand your position and plan for the future.
📞 Contact us today for a personal tax review.
Disclaimer:
The information provided in this article is general in nature and does not constitute personal financial, legal or tax advice. While every effort has been made to ensure the accuracy of this content at the time of publication, tax laws and regulations may change, and individual circumstances vary. Dolman Bateman accepts no responsibility or liability for any loss or damage incurred as a result of acting on or relying upon any of the information contained herein. You should seek professional advice tailored to your specific situation before making any financial or tax decision.
