Australia’s tax laws have been striving to make payments fair for every individual. There is a percentage of people who live very comfortably, and many Australian citizens are barely making rent. To help those in a financial predicament, the government has implemented tax offsets to benefit low and middle-income earners.

What is a Tax Offset?

Tax offsets let low-income earners pay less tax on their taxable income outside their deductions. They can reduce your tax payable to zero, but any unused offset cannot be refunded.

How does this Affect Taxpayers with Low and Middle Incomes?

Tax offsets are only granted to those who truly need them. They are based on the amount on your taxable income and your tax payable. Non-refundable tax offsets like these can lower your tax payable to zero if used, but this will not be granted if not filed for.

As for other deductions on your income, offsets also can’t reduce your Medicare levy and Medicare Levy Surcharge, if you have any. In addition to the tax paid on your taxable income is 2 per cent of the Medicare levy.

How to Claim Low and Low to Middle Tax Offsets

You don’t need to apply for anything to get the low and low to middle tax offsets. If the Australian Taxation Office (ATO) finds that you are eligible for it, they apply as long as you submit your tax returns on time.

You can view it on your notice of assessment in the non-refundable tax offsets section to find out how much you were entitled to. If you completed things online, your notice of assessment will be sent to your myGov Inbox as soon as your return is finalised.

Any tax refund will be restored to your bank account. If you have any debt to the Australian government, the ATO will take some of it out of your refund.

Recent Changes to the Personal Income Tax Plan

Later last year, in October, the government announced they would start implementing stage two of the Personal Income Tax Plan. This stage increases income tax offsets and states that low and middle-income tax offsets will still be available for the 2020–2021 income year.

If your taxable income is between $37,001 and $126,000, you can qualify for some or all low and middle-income tax offsets. The offset amount is relative to factors, such as your taxable income and how much tax you have paid.


Tax offsets can be beneficial to many low and middle-income earners struggling to make ends meet. As everyone lives on different income levels, it wouldn’t be fair for everyone to pay the same as the people on the top. Being aware of the policies and qualifications can help you save on expenses and allow you to live more comfortably, so it is always a great reminder to tell every working adult to file their taxes.

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