Salary & Pay
Historical Tool: The LMITO (Low and Middle Income Tax Offset) was discontinued after the 2021-22 financial year. Use this tool to verify your past assessments or understand why your recent refunds may have decreased.
LMITO Amount
$1,500
For the 2021-22 tax year
You were in the 'sweet spot' for LMITO, receiving the full $1,500 offset. Since this offset ended after 2021-22, your annual tax refund likely decreased by exactly $1,500 the following year.
The Low and Middle Income Tax Offset (LMITO), affectionately known by many Australians as the 'lamington,' was a temporary tax reduction measure designed to support low and middle-income earners. While it was discontinued after the 2021-22 financial year, it remains a critical topic for understanding Australian tax history and why many people's tax refunds 'shrunk' in recent years. LMITO was not a direct payment into your bank account; rather, it was a non-refundable tax offset that reduced the amount of tax you owed when your tax return was assessed by the ATO. For millions of Australians earning between $37,001 and $126,000, LMITO provided a significant boost to their annual refund, with the maximum benefit reaching $1,500 in its final year. Understanding how LMITO worked helps taxpayers explain the variance in their historical tax assessments and highlights the role of 'offsets' in the Australian tax system compared to direct deductions or base rate changes. It also serves as a reminder of the 'Stage 1 and 2' tax reforms that preceded the more recent and debated Stage 3 cuts.
In its final year (2021-22), the LMITO calculation was based on specific income thresholds. For taxable incomes up to $37,000, the offset was $675. Between $37,001 and $48,000, the offset increased by 7.5 cents for every dollar over $37,000, reaching a maximum of $1,500. For incomes between $48,000 and $90,000, the full $1,500 was available. For those earning between $90,001 and $126,000, the offset phased out at a rate of 3 cents for every dollar over $90,000. For anyone earning $126,001 or more, the offset was zero. It's important to note that LMITO was separate from the Low Income Tax Offset (LITO), which is still active. The 'LMITO Checker' calculates these historical values based on your taxable income for the relevant periods. Because it was a non-refundable offset, it could only reduce your tax payable to zero—it couldn't create a 'negative' tax situation where the ATO paid you more than you originally withheld. This distinction is vital for understanding why low-income earners who already paid no tax didn't see an increase in their refund from LMITO.
The removal of LMITO created what experts call a 'tax cliff.' Because the offset disappeared all at once after 2021-22, many Australians saw their tax refunds decrease by up to $1,500 the following year despite their income staying the same. It's essential to understand that this wasn't a tax increase, but the end of a temporary tax 'bonus.'
Don't confuse the two. LITO (Low Income Tax Offset) is permanent and targets those earning under $66,667. LMITO was temporary and had a much higher ceiling ($126k). If you are a low-income earner today, you still benefit from LITO, but you have lost the additional 'top-up' that LMITO once provided.
If you realized you missed claiming or correctly calculating LMITO on a past return (specifically 2018-19 through 2021-22), you can still lodge an amendment with the ATO. The LMITO was automatically applied in most cases, but for those with complex distributions or multiple income streams, checking the historical calculation can ensure no money was left on the table.
Look for the 'Low and middle income tax offset' line item on your old tax papers. This will show you exactly how much you received. Use this calculator to verify that amount if you believe your income was assessed incorrectly.
If you are comparing this year's potential refund to your 2022 refund, remember to 'subtract' the LMITO amount you received back then. This prevents disappointment when your current refund appears smaller, as the $1,500 buffer is no longer part of the system.
Historically, if an earner was just over the $126,000 cap, an extra $100 in work-related deductions could have 'unlocked' a partial LMITO. While this specific strategy is no longer available for LMITO, the same logic applies to other current offsets and family benefit thresholds.
Mark earned $75,000 in 2022. He received the full $1,500 LMITO, which resulted in a healthy tax refund. In 2023, he earned the same $75,000 but his refund was $1,500 lower. By using this checker, he realized his tax rates hadn't changed, but the temporary offset had simply expired as planned.
Emily worked part-time and earned $40,000. She received a $900 LMITO ($675 base + $225 increment). Because she only paid about $4,000 in tax total, the offset represented a nearly 25% reduction in her total tax liability for that year.
David earned $120,000. He was in the 'phase-out' zone for LMITO. His offset was calculated as $1,500 - [($120,000 - $90,000) * 0.03] = $600. While smaller than the maximum, it still provided a helpful reduction in his final tax bill compared to the current system.
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