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Claiming tax offsets and rebates

Tax offsets (also known as ‘rebates’) can directly reduce the amount of tax payable on a person’s taxable income. While claiming certain tax offsets can reduce a person’s tax payable to zero, on their own, they cannot create a tax refund.

Here are three common types of tax offsets some individuals are eligible to claim:

Health insurance
A person’s entitlement to a private health insurance rebate or tax offset depends on their income level. For those who have private health insurance:

  • the amount of private health insurance rebate you are entitled to receive is reduced if your income is more than a certain amount
  • the ATO calculates the amount of private health insurance rebate you are entitled to receive when you lodge your tax return.

You can claim your private health insurance rebate as a premium reduction, which lowers the policy price charged by your insurer, or as a refundable tax offset through your tax return.

Low-income earners
Some Australians may be eligible for a tax offset if they are considered to be a low-income earner and are an Australian resident for income tax purposes.The offset can only reduce the amount of tax they pay to zero and it does not reduce their Medicare levy.

If your taxable income is less than $66,667, you will get the low-income tax offset. The maximum tax offset of $445 applies if your taxable income is $37,000 or less. This amount is reduced by 1.5 cents for each dollar over $37,000.

If you are under 18 as at 30 June of the income year and you have unearned income, your low-income tax offset cannot reduce the tax payable on this income.

Seniors and pensioners tax offset
Senior Australians may be eligible for the seniors and pensioners tax offset (SAPTO). The SAPTO can reduce the amount of tax you are liable to pay. In some cases, it 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 or allowance. If you’re a senior, you must meet the age requirement for the Age pension. This includes if you qualified for the Age pension, but did not receive it.


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