Not only can you claim allowable deductions come tax time, you may also be entitled to claim tax offsets. These offsets directly reduce the amount of tax payable on your taxable income. Offsets can reduce your tax payable to zero but on their own, they can’t get you a benefit. There are eight main offsets you can claim including:
1. Benefit recipients: This tax offset is available to taxpayers who receive certain Australian Government allowances and payments. You pay no tax if you: receive the full amount of any of the qualifying benefits and allowances for the full year and have no other taxable income.
2. Taxpayers with dependents: You may be entitled to a tax offset if you maintained a dependent spouse born before 1 July 1952. You may also be entitled to a tax offset if you maintained a dependent who is an Australian resident for tax purposes, is an invalid or carer and your: spouse; child, brother or sister aged 16 years old or older; spouse’s child, brother or sister aged 16 years old or older; parent or spouses parent.
3. Health insurance: The private health insurance offset is a percentage of the premium you pay to a registered health insurer for a complying private health insurance policy. This rebate is income tested against three income tier thresholds.
4. Medical expenses: Depending on your family status and adjusted family income, you may be eligible to claim a tax offset for the net medical expenses you have incurred over the applicable claim threshold. For a single (single at 30 June 2013 and no dependent children) the threshold is $84,000 or less and you can claim 20% of net medical expenses over $2,120. Or 10% of net medical expenses over $5,000 if you earn above $84,000. For a family (with spouse at 30 June 2013, or dependent children at any time during the year, or both), the threshold is $168,000 or less and you can claim 20% of net medical expenses over $2,120. If your adjusted family income is above $168,000, you can claim 10% of net medical expenses over $5,000.
5. Senior Australians and pensioners: Senior Australians may be eligible for mature worker offset and/or the senior Australian or pensioner offset. The mature age worker tax offset aims to encourage and reward mature age workers who stay in the workforce.
6. Superannuation: The two superannuation-related tax offsets relate to your super income stream and spouse super contributions.
7. Low income earners: You may be eligible for a tax offset if you are a low-income earner- for example, if you only work part-time. The ATO will work this out for you when you lodge your tax return, you don’t have to claim this.
8. Zones and overseas forces: You may be eligible for an overseas forces or remote zone tax offset, but not both. Zone tax offset applies if you live or work in a remote or isolated area of Australia for at least half of the income year. Overseas forces tax offset is when you serve in a specified overseas locality as a member of the Australian Defence Force, Australian Federal Police, or a United Nations armed force, and income relating to that service is not specifically except from tax.
For more information on tax offsets please refer to the ATO website or reach out to the team at Fortis Accounting Partners. You can get in touch with us on 02 9267 0108, or via info@exemplary-financial.flywheelsites.com.
