BCEC Policy Brief 2020: Low-Middle Income Tax Offset

Impact of the removal of the low-middle income tax offset
AuthorsRebecca Cassells, Alan Duncan
PublishedOctober 2020
PublisherBankwest Curtin Economics Centre
Number of Pages7

Our assessment of the combined personal tax, rebate and JobSeeker reforms include combined and separate impacts of the following changes to the tax-transfer system over the 2020-21 and 2021-22 financial years relative to a base year (2019-20). These include:

  • Bringing forward Stage 2 of the Personal Tax Plan to 2020-21, which includes:
    • Changes to income tax brackets: raising the thresholds of the 19%, 32.5% and 37% tax brackets
    • Increasing the Low Income Tax Offset (LITO) from $445 to $700 (up $255) coupled with changes to the thresholds and withdrawal tapers
    • Removal of the $1,080 Low and Medium Income Tax Offset (LMITO) from 2021-22
  • Reduction of the JobSeeker COVID-19 supplement in September 2020
  • Withdrawal of the JobSeeker COVID-19 supplement in December 2020

This brief provides analysis of changes in taxable income in 2019-20, 2020-21 and 2021-22. Analysis with and without JobSeeker is provided.