Dependant (Invalid and Carer) Tax Offset
A taxpayer may be entitled to the Dependant (Invalid and Carer) Tax Offset (‘DICTO’) broadly, if they:
- maintain their spouse, who is an invalid or who cares for an eligible invalid;
- maintain their parent or their spouse’s parent, who lives in Australia and is an invalid or who cares for an eligible invalid; or
- maintain their or their spouse’s invalid child, brother or sister who is aged 16 years or
Note, the ATO generally refers to this offset as the Invalid and Invalid Carer Tax Offset to avoid the impression that it may be claimed with respect to any dependant of a taxpayer.
The maximum offset and adjusted taxable income (‘ATI’) amounts for 2021/22 are as follows:
| Maximum Offset Amount1
$ |
Maximum ATI2
$ |
| 2,833 | 11,614 |
- The offset reduces by $1 for every $4 by which the dependant’s ATI exceeds $282 and cuts out if the maximum ATI is
- To claim the DICTO for a dependant other than a spouse, the combined ATI of the taxpayer and their spouse (if applicable) must not exceed $100,900. If claiming for a spouse, the taxpayer’s ATI must not exceed $100,000. An individual’s ATI includes their taxable income and any adjusted fringe benefits total, tax-free pensions or benefits, target foreign income, reportable superannuation contributions and total net
investment losses, less any deductible child maintenance expenditure for the year.
Notionally Retained Dependant Tax Offsets
The following tax offsets have been abolished, but have been notionally retained for other purposes (e.g., for calculating a taxpayer’s entitlement to the Zone Tax Offset and/or Overseas Forces Tax Offset):
|
Description |
Max Offset
$ |
Max ATI
$ |
| First child under 21 (not being a student) | 376 | 1,786 |
| Each other child under 21 (not being a student) | 282 | 1,410 |
| Each student under 25 | 376 | 1,786 |
| Sole parent | 1,607 | N/A |
Low Income Tax Offset
Resident individuals (including trustees assessed under S.98 of the ITAA 1936 in respect of presently entitled resident beneficiaries) may be entitled to the Low Income Tax Offset (‘LITO’).
| Taxable Income
$ |
Tax Offset1 |
| 0 – 37,500 | $700 |
| 37,501 – 45,000 | $700 – (5% of excess over $37,500) |
| 45,001 – 66,667 | $325 – (1.5% of excess over $45,000) |
| 66,668+ | Nil |
1 A minor who is not an ‘excepted person’ is ineligible to apply the LITO to reduce tax on their unearned (i.e., Div. 6AA) income.
Low and Middle Income Tax Offset
Resident individuals (including trustees assessed under S.98 of the ITAA 1936 in respect of presently entitled resident beneficiaries) may be entitled to the Low and Middle Income Tax Offset (‘LMITO’).
| Taxable Income
$ |
Tax Offset1 |
Plus cost of living Tax Offset |
| 0 – 37,000 | $255 | $420 |
| 37,001 – 48,000 | $255 + 7.5% of excess over $37,000 | $420 |
| 48,001 – 90,000 | $1,080 | $420 |
| 90,001 – 126,000 | $1,080 – 3% of excess over $90,000 | $420 |
| 126,001+ | Nil | Nil |
- A minor who is not an ‘excepted person’ is ineligible to apply LMITO to reduce tax on their unearned (i.e., 6AA) income.
- The Federal Government announced on 29 March 2022 as part of its budget a once-off $420 ‘cost of living tax offset’ for the 2021/22 income year, which will be provided in the form of an increase to the existing This will increase the maximum LMITO benefit to $1,500 for individuals and $3,000 for couples, and will be paid from 1 July 2022 when Australians submit their tax returns for the 2021/22 income year.
Other than those who do not require the full offset to reduce their tax liability to zero, all LMITO recipients will benefit from the full $420 increase. All other features of the LMITO remain unchanged.
To the extent an individual is entitled to an amount of LMITO for the 2021/22 income year under the current law, their entitlement is proposed to be increased by $420, as set out in the above table.
- The LMITO is not available from the 2022/23 income
Private Health Insurance Tax Offset
The Private Health Insurance (‘PHI’) tax offset (or rebate) is a Government contribution towards the cost of complying policies covering hospital, general treatment or both. ‘Tiers’ based on ‘income for surcharge purposes’ (see page 6) and age are used to determine the rebate percentage and amount.
The rebate percentages are indexed on 1 April each year. Therefore, two percentages apply in calculating a taxpayer’s rebate for an income year – one for the period 1 July to 31 March, and one for 1 April to 30 June.
The income thresholds and rebate percentages that apply for the 2022 income year are as follows:
| Base Tier
$ |
Tier 1
$ |
Tier 2
$ |
Tier 3
$ |
|
| Income Thresholds | ||||
| Singles1 | 90,000 or less | 90,001 – 105,000 | 105,001 – 140,000 | 140,001+ |
| Families/Couples2 | ||||
| 0 or 1 dependant | 180,000 or less | 180,001 – 210,000 | 210,001 – 280,000 | 280,001+ |
| 2 dependants | 181,500 or less | 181,501 – 211,500 | 211,501 – 281,500 | 281,501+ |
| 3 dependants | 183,000 or less | 183,001 – 213,000 | 213,001 – 283,000 | 283,001+ |
| 4 dependants | 184,500 or less | 184,501 – 214,500 | 214,501 – 284,500 | 284,501+ |
| 5 dependants | 186,000 or less | 186,001 – 216,000 | 216,001 – 286,000 | 286,001+ |
| Each extra child | 1,500 | 1,500 | 1,500 | 1,500 |
| Oldest person on
policy is: |
Rebate 1 July 2021 to 31 March 2022 |
|||
| – aged under 65 | 24.608% | 16.405% | 8.202% | 0% |
| – aged 65 – 69 | 28.710% | 20.507% | 12.303% | 0% |
| – aged 70 or over | 32.812% | 24.608% | 16.405% | 0% |
| Oldest person on
policy is: |
Rebate 1 April 2022 to 30 June 2022 |
|||
| – aged under 65 | 24.608% | 16.405% | 8.202% | 0% |
| – aged 65 – 69 | 28.710% | 20.507% | 12.303% | 0% |
| – aged 70 or over | 32.812% | 24.608% | 16.405% | 0% |
- A ‘single’ taxpayer is someone who is not married on the last day of the income year and has no dependent children or
- A person will generally be assessed under the ‘families/couples’ tier thresholds if:
- the person is married on the last day of the income year (including a de facto couple) – in this case, the combined income for surcharge purposes of the taxpayer and their spouse is used; or
- at any time during the year, the person contributes in a substantial way to the maintenance of a dependent child who is either the person’s child (as defined in S.995-1 of the ITAA 1997), or the person’s sibling who is dependent on them for economic
Seniors and Pensioners Tax Offset
The Seniors and Pensioners Tax Offset (‘SAPTO’) is broadly available to an individual who:
- on at least one day during the income year is eligible for a pension, allowance or benefit under the Veterans’ Entitlements Act 1986, has reached pension age under that Act and is not in jail; or
- on at least one day during the income year is qualified for an age pension under the
Social Security Act 1991 and is not in jail; or
u has included in their assessable income: (a) a social security pension or education entry payment (as defined in the Social Security Act 1991); or (b) a service pension, carer service pension, income support supplement or Defence Force Income Support Allowance (DFISA), as defined in the Veterans’ Entitlements Act 1986, or DFISA-type payment mentioned in Div. 4 of Part VIIAB of that Act; and on at least one day during the income year, is not in jail.
The individual’s ‘rebate income’ for the income year must be less than a prescribed amount (refer to the table below). Rebate income of an individual for an income year is calculated as the sum of their:
- taxable income for the year (excluding any assessable FHSS released amount);
- reportable superannuation contributions for the year;
- total net investment loss for the year; and
- adjusted fringe benefits total for the income
The 2021/22 maximum offset and threshold amounts for SAPTO are as follows:
|
Family Situation1,2 |
Maximum Offset
$ |
Shade-out Threshold3
$ |
Cut-out Threshold3
$ |
|
Single |
2,230 |
32,279 |
50,119 |
|
Each member of a couple4 |
1,602 |
28,974 |
41,790 |
| Each member of a couple separated due to illness or because one was in a nursing home4 |
2,040 |
31,279 |
47,599 |
- For a taxpayer who is a member of a couple (married or de facto, whether of the same or opposite sex), eligibility for SAPTO is established by halving the combined ‘rebate income’ of the taxpayer and their spouse and comparing this amount to the relevant Cut-out Threshold. If this figure is below the Cut-out Threshold, then the amount of each person’s SAPTO entitlement depends on their own ‘rebate income’ and their eligibility for any unused portion of their spouse’s If the Cut-out Threshold is reached, neither person is eligible for SAPTO.
- A person married for part of the year can claim on whatever basis gives them the highest
- The maximum SAPTO reduces by 5 cents for each dollar of ‘rebate income’ over the Shade-out Threshold and reduces to nil for rebate income levels at or above the Cut-out Threshold.
- If both the taxpayer and their spouse are eligible for SAPTO, any unused portion of the spouse’s offset may be transferred to the taxpayer, broadly if the tax payable by the taxpayer exceeds their offset.