Tax offsets (sometimes referred to as rebates) directly reduce the amount of tax payable on your taxable income.
In general, offsets can reduce your tax payable to zero, but on their own they can’t get you a refund.
The beneficiary tax offset is available if you receive certain Australian Government allowances and payments.
You pay no tax for the year if you:
If you have other assessable income you may still need to pay some tax.
To claim the offset, you must declare the payment you receive at the correct item on your tax return.
The ATO will automatically calculate the offset for you when the ATO process your tax return.
You may be entitled to a tax offset if you maintained your:
and they are an invalid or carer.
An invalid must have received one of the following:
A carer must have cared for your or your spouse’s invalid child or sibling aged 16 or older and:
The Medicare levy surcharge (MLS) is designed to reduce the demand on the public Medicare system.
You will be required to pay the MLS if your income for MLS purposes is above the base income threshold and you or your family do not have an appropriate level of private patient hospital cover. This applies unless you are exempt from paying the Medicare levy and your dependents are also exempt or have an appropriate level of private cover.
The base income threshold is $90,000 for singles and $180,000 for families. However, you do not have to pay the MLS if your family income exceeds the threshold but your own income for MLS purposes was $20,896 or less.
Private patient hospital cover is provided by registered health insurers for hospital treatment provided in an Australian hospital or day hospital. You must arrange and pay for your cover directly with the insurer.
For singles, an appropriate level of cover must have an excess of $500 or less. Couples or families must have an excess of $1,000 or less.
General cover, commonly known as ‘extras’, is not private patient hospital cover. It covers items such as optical, dental, physiotherapy or chiropractic treatment.
We will apply the rate of MLS that corresponds with your income for MLS purposes. If you have to pay the surcharge, it will be included with the Medicare levy and shown as one amount on your notice of assessment called Medicare levy and surcharge.
|No surcharge||0%||$89000 or less||$180000 or less|
|Tier 1||1%||$90001 – $105000||$180001 – $210000|
|Tier 2||1.25%||$105001 – $140000||$210001 – $280000|
|Tier 3||1.5%||$140000 or more||$280001 or more|
The private health insurance (PHI) rebate is an amount the government contributes towards the cost of your private health insurance premiums. Your eligibility to receive a PHI rebate will depend on your single or family income for surcharge purposes.
You can either receive this rebate upfront through a reduction in the cost of your premiums from your insurer, or as a refundable tax offset when you lodge your tax return.
The rebate percentage is adjusted on 1 April each year by a rebate adjustment factor.
Rebate for premiums paid 1 July 2020 – 31 March 2021
|Aged < 65||Aged 65-69||Aged 70+|
Rebate for premiums paid 1 April 2021 – 30 June 2021
|Aged < 65||Aged 65-69||Aged 70+|
Please ensure you provide your year-end tax statement from your private health insurance provider.
If you are a Senior Australian, you may be eligible for the seniors and pensioners tax offset. The seniors and pensioners tax offset (SAPTO) can reduce the amount of tax you are liable to pay. In some cases, this offset may reduce your tax liability to zero and you may not have to lodge a tax return. To be eligible for this tax offset, you have to meet certain conditions relating to your income and eligibility for an Australian Government pension.
If you are a senior, you must meet the age requirement for the Age pension to be eligible for the offset. In some cases, you may also be able to transfer your eligible spouse’s unused SAPTO to you. The ATO calculate their transfer amount available and include this amount when calculating your SAPTO.
There are two super-related tax offsets for which you may be eligible:
If you receive income from an Australian super income stream, you may be entitled to a tax offset equal to:
The tax offset amount available to you will be shown on your payment summary. You’re not entitled to a tax offset for the taxed element of any super income stream you receive before you turn 55 years old unless the super income stream is either a:
You’re not entitled to a tax offset for the untaxed element of any super income stream you receive before you turn 60 years old unless:
If you make contributions to a complying superannuation fund or a retirement savings account (RSA) on behalf of your spouse (married or de facto) who is earning a low income or not working, you may be able to claim a tax offset.
You will be entitled to a tax offset of up to $540 per year if you meet all of the following conditions:
The tax offset for eligible spouse contributions can’t be claimed for super contributions that you made to your own fund, then split to your spouse. That is called a rollover or transfer, not a contribution.
You may be eligible for a tax offset if you are a low-income earner – for example, if you work part time.
You don’t have to claim this offset. The ATO will work it out for you when you lodge your tax return.
If you live or work in a remote area or serve in forces overseas, you may be eligible for one of the following:
To qualify for the zone tax offset, you must have lived or worked in a remote area (not necessarily continuously) for:
If you lived in a zone for less than 183 days in the current income year, you may still be able to claim a tax offset as long as you lived in a zone for a continuous period of less than five years and:
You may be eligible for an overseas forces tax offset if you serve in a specified overseas locality as a member of one of the following:
Periods of service for which your income was exempt foreign employment income are excluded in working out your eligibility for the tax offset. To claim the full tax offset, you must have served in an overseas locality for 183 days or more in the income year. If your overseas service was less than 183 days, you may be able to claim part of the tax offset. If you qualify for both an overseas forces and a zone tax offset, you can claim only one of them, but you may claim the highest one.
The net medical expenses tax offset is being phased out.
From 2015–16 until 2018–19, claims for this offset are restricted to net eligible expenses for disability aids, attendant care or aged care.
Net expenses are your total eligible medical expenses minus refunds from Medicare, National Disability Insurance Scheme (NDIS) and private health insurers which you or someone else, received or are entitled to receive.
This offset is income tested. If you are eligible for the offset, the percentage of net medical expenses you can claim is determined by your adjusted taxable income (ATI) and family status.