4. Low and Middle Income Tax Offset (LaMITO) introduced

2018/19 sees the introduction of LaMITO. LaMITO will be in place for four financial years and is on top of the existing Low Income Tax Offset (LITO). LaMITO is based on the client’s taxable income and is calculated as outlined in the table below:

LaMITO will increase the effective tax free threshold to $21,594 when viewed in conjunction with LITO. LaMITO is non-refundable and cannot be carried forward to future years.

LaMITO will mean a tax saving for every client earning between $20,594 and $125,333. Furthermore, every client earning more than $87,000 will benefit from the upper threshold for the 32.5% tax bracket being increased to $90,000. These tax savings provide opportunities for clients.


Josephine earns $50,000 pa as a shop assistant. She could contribute her $530 in LaMITO to super under the FHSS scheme, claim it as a tax deduction then withdraw it to purchase her first home. This process will see Josephine pay only 19.5% total tax on that income (15% contributions tax and 4.5% upon withdrawal) – well below their marginal rate of 34.5% (including Medicare levy).

The information contained in this publication is based on the understanding KeyInvest (ABN 74 087 649 474 AFSL No. 240667) has of the relevant Australian legislation as at the date shown in this publication.

The information contained in this publication is of a general nature only and is intended for use by financial advisers and other licensed professionals only. It must not be handed to clients for their keeping nor can any copies of sections of this publication be given to clients. KeyInvest is not a registered tax agent under the Tax Agent Services Act 2009. We recommend that your client be referred to their registered tax agent or legal adviser prior to implementing any recommendations that you may make based on the information contained in this publication.