More money in the hands of low income earners
The Low Income Tax Offset (LITO) is available for people earning between $16,000 and $67,500 and is capped at $1,500. However, from 1 July 2011, the proportion that is delivered by way of reduced tax withholdings will be changed from 50% to 70%.
This means that the LITO will be partially paid throughout the year, rather than taxpayers having to wait until they lodge their tax return. This measure affects the timing, but not the amount of the tax offset.
In a separate measure, the low income threshold for Medicare Levy purposes will increase to $18,839 for individuals and $31,789 for families (increased by $2,919 for each dependant child) from 1 July 2010. Pensioners below Age Pension age will have a threshold of $30,439.
Sources:
MLC Technical Update 10 May 2011