As one of the most common concepts that accountants in the Gold Coast consistently grapple with annually, tax offsets can be rather confusing for any Australian. While some may have heard of the concept once or twice, it is largely foreign for many taxpayers.

However, no amount of confusion or unfamiliarity diminishes the fact that tax offsets are a crucial part of your tax time regimen that you should understand as best as possible.

What Are Tax Offsets and How Do They Work?

As complicated as they may sound, tax offsets are rather straightforward and easy to understand. According to the Australian Taxation Office (ATO), a tax offset is a tool or system that directly reduces the amount of tax payable on an eligible person’s taxable income. It can be leveraged during any financial year and comes in various forms, one example being the Low and Middle Income Tax Offset (or the “Lamington”, as it’s called).

This particular system is also known as a tax rebate. It reduces the amount of tax you owe at the end of a financial year. To reap these benefits, it’s vital to understand that some offsets require a claim by lodging paperwork, while others need minimal or no active claims at all. Many tax offsets are non-refundable, which means you will not get an actual monetary refund. Instead, it works with other measures that you use for reduced expenses come tax time.

If you want to leverage these tools to your advantage or to the advantage of your employees, then it’s ideal that you enlist the services of a trusted expert like New Wave Accounting!

Tax Offsets Available for Eligible Australians

Currently, the Australian Taxation Office offers three main types of tax offsets that eligible citizens can use in their returns:

1. Super-related Tax Offsets

There are two super-related tax offsets available for tax-paying Australians. One is for those receiving income from an Australian super income stream, while another option is available for those making contributions to a spouse’s superannuation.

Based on the current suggestions of the ATO, these are the following advantages that you can seek to receive with this particular type of tax offset:

  • 10 per cent of the un-taxed element of your super stream income (which is typically made available up to a maximum offset of $10,000), or;
  • 15 per cent of the taxed element of your super stream income

(More information about super-related tax offsets can be read here.)

2. Tax Offsets for Low and Middle-Income Earners

This particular type of tax offset can be broken up into two different variations: the Low Income Tax Offset and the Low and Middle Income Tax Offset (or LMITO, as mentioned above). If you’re eligible for these particular solutions, the ATO will work them out for you when you lodge your annual returns—which leads to more benefits!

3. Private Health Insurance Tax Offset

Alternatively known as the private health insurance rebate, the private health insurance tax offset is an incentivisation to encourage Australians to seek private health insurance. You are automatically entitled if you take out or renew an eligible private health insurance policy that provides a degree of private hospital payments.

However, it’s important to understand that this particular offset is subject to income testing and is paid as a percentage contribution towards the cost of your premiums.


To make paying taxes easier for yourself or those under you, there are various tax offsets that you can use to gain an advantage. Through the help of this guide and all the key points mentioned above, you can maximise your available opportunities to ease your tax dues!

New Wave Accounting is a small business accounting firm in the Gold Coast specialising in various services, such as company set-ups and outsourced bookkeeping and accounting services. Get in touch with us today to see how we can keep you in financial shape!