Tax offsets are coupons from the ATO.
When we go grocery shopping, it makes sense to bring as many coupons as we can to lower how much we pay. Wouldn’t it be great if we could do the same for our taxes? Well, you can! Tax offsets are coupons from the ATO since they help to lower the amount you owe to the ATO. You might be able to qualify for more than one offset. Let us help you lower your tax due and determine which tax offsets are beneficial to you.
How do I qualify for an offset?
First, let’s keep in mind that each tax offset has different requirements. For example, the Net Medical Tax Offset requires you to make below a certain income threshold. Straightaway, tax offsets take into account factors like family status, income type, age, certain payments, and contributions.
The ATO Introduces New Tax Offsets
With a new tax year, comes new tax offsets! The ATO offers a new tax offset called the Low Income Superannuation Tax Offset (LISTO). This will prevent taxpayers who earn under $37,000, from paying more tax on their superannuation contributions. Also, this offset is capped at $500, the minimum amount is $10 and the calculation is 15% of you or your employer’s superfund contributions. Your LISTO payment will be made directly to your superfund.
Now, let’s talk about business. The Exploration Development Incentive (EDI) helps business owners receive an individual offset if they have any exploration credits through their business. You can qualify for this credit whether you’re a member of a trust or partnership. In order to receive this offset, the number of exploration credits you receive will need to be equal to a frank distribution; such as dividends, from the same source of the trust or partnership.
Nevertheless, the EDI affects many different business entities. If you’re still unsure about this tax offset, the ATO provides helpful FAQs.
The ATO Urges to Save for Retirement
Retirement is right around the corner for some taxpayers but the ATO is looking out for younger taxpayers. They updated The Super Contributions on Behalf of your Spouse Tax Offset in an effort to help couples save for their retirement. For instance, if you make contributions to a super fund or RSA on behalf of your spouse, and your spouse is unemployed or earns below the income threshold, this offset could be right for you. This will allow you to claim up to $540 per year if you meet the requirements of two new changes.
- The sum of your spouse’s assessable income, total reportable fringe benefits, and reportable employer contributions is less than $40,000. In 2017, this skyrocketed to $40,000 from the 2016 amount of $13,800.
- Your spouse’s total superannuation balance on 30 June of the previous fiscal year must be below the general transfer balance cap. ($1.6 million in 2017–18)
What is a transfer balance cap?
Here’s a breakdown of what this means. A transfer balance cap is a limit on how much you can transfer from your super to your tax-free “retirement phase” account to get your pension income. Keep in mind, any retirement phase income stream before 1 July 2017 will count towards the balance cap on 1 July 2017.
The following applies to your gap:
- Super pension you’re receiving, or start to receive, from a deceased spouse’s super account
- Pension income you are receiving from a former spouse’s super pension as part of a family court settlement
Medical bills costing you an arm and a leg?
If you have heaps of medical receipts by paying out of pocket, you’re in luck. The Net Medical Expenses Offset comes in handy. However, the ATO plans on phasing out this offset. In other words, you can only claim expenses for disability aids, attendant care or aged care. Here’s what applies:
- Disability aids are items manufactured to aid a person with a disability. (This does not include household or commercial appliances.)
- Attendant care is any service and care given to individuals with specific disabilities to help in daily living. (Home nursing, home maintenance, personal assistance and domestic services to those who are blind or bound to a bed or wheelchair permanently)
- Aged care are services by an approved aged care provider that follows the guidelines of the Aged Care Act 1997.
At the same time, medical expenses rate has gone up. Above all, you will need more medical expenses to receive this offset. Below, this chart shows how much you can claim based on your family status and adjusted taxable income.
|Family Status at 30 June:||ATI threshold (combined if married):||You can claim:|
|Single||$90,000 or less||20% of net medical expenses over $2,299|
|Single||Above $90,000||10% of net medical expenses over $5,423|
|Family (with a spouse, dependent children or both)||$180,000* or less||20% of net medical expenses over $2,299|
|Family (with a spouse, dependent children or both)||Above $180,000*||10% of net medical expenses over $5,423|
* add on $1,500 to your ATI for each additional child dependent
These Tax Offsets Remain Unchanged:
Here are some of your favourite tax offsets that remain the same.
- Invalid and Invalid Carer Tax Offset
- Low-Income Tax Offset
- Private Health Insurance Rebate
- Super Income Stream Tax Offset:
- Zone Tax Offset
- Overseas Forces Tax Offset
- Seniors and Pensioners Tax Offset (SAPTO)
- Beneficiary Tax Offset
Did you find any offsets that you can use?
Finally, now that you found which 2017 Australian tax offsets you can use, start on your tax return today! If you have any questions, don’t hesitate to reach out to our tax team via email, or ring our phone support at 1300 ELODGE (356 343).
Learn about lodging your tax returns here.
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