Why is your 2023 tax refund lower this year than it was last year?
Like many of us, you may be hopeful of receiving a little bit back from the from the ATO after submitting your tax returns. However, there are important changes to the Low and Middle Income Tax Offset (LMITO) that may mean you receive much less than you bargained for!
In 2019, the federal government introduced the LMITO. This meant that taxpayers on incomes of up to $126,000 were eligible for the LMITO offset.
This offset was applied against the tax payable, and generally meant taxpayers received an increase in their tax refunds for the financial years between the 2018-19 and 2021-22. Depending on their income, eligible taxpayers received an LMITO of a varying amount, that was up to $1,500.
This has now changed. The federal government has not extended the LMITO for the 2022-23 financial year. Therefore, taxpayers will likely see their tax refunds reduced this year by between $675 and $1,500.
The Low Income Tax Offset (LITO) - which is a separate offset to the LMITO - has not changed. There is more information on the ATO website about eligibility for the LITO.
Do you still have questions? Get in touch with the ABA Advice Beyond Accounting Team
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