Australian Tax Offsets
LITO, SAPTO, and other offsets that reduce your tax bill
How Tax Offsets Work
Tax Deduction
Reduces your taxable income
Tax Offset
Reduces your actual tax dollar-for-dollar
Low Income Tax Offset (LITO)
LITO provides up to $700 for low income earners. It's automatically applied when you lodge your tax return.
| Taxable Income | LITO Amount |
|---|---|
| $0 – $37,500 | $700 |
| $37,501 – $45,000 | $700 minus 5c per $1 over $37,500 |
| $45,001 – $66,667 | $325 minus 1.5c per $1 over $45,000 |
| Over $66,667 | $0 |
Example: On a $50,000 salary, you get approximately $250 LITO, reducing your tax from $5,788 to $5,538.
Seniors and Pensioners Tax Offset (SAPTO)
SAPTO provides tax offsets for Australians of Age Pension age (67+) who meet eligibility requirements.
| Status | Max SAPTO |
|---|---|
| Single | $2,230 |
| Couple (each) | $1,602 |
| Couple (illness separated) | $2,040 |
Other Common Tax Offsets
Zone Tax Offset
For people living in remote or isolated areas of Australia. Up to $1,173 depending on zone.
Private Health Insurance Offset
Reduces private health insurance premiums or provides a tax offset. Income-tested rebate.
Spouse Super Contribution Offset
Up to $540 for contributions to a low-income spouse's super fund.
Franking Credit Offset
From franked dividends. Can be refundable if your tax is less than the credits.
Frequently Asked Questions
What is a tax offset?
A tax offset directly reduces the amount of tax you pay, dollar for dollar. Unlike a tax deduction (which reduces taxable income), a $500 tax offset reduces your tax bill by $500.
What is the Low Income Tax Offset (LITO)?
LITO provides up to $700 tax offset for low income earners. You get the full $700 if you earn $37,500 or less, and it phases out between $37,500 and $66,667.
Who qualifies for SAPTO?
The Seniors and Pensioners Tax Offset is for Australian residents of Age Pension age (67+) who receive a qualifying pension or meet the income test. It provides up to $2,230 for singles.
Do I need to claim tax offsets?
Most tax offsets are automatically applied by the ATO when you lodge your tax return. You don't need to do anything special — they're calculated based on your income and eligibility.
Can tax offsets give me a refund?
Most tax offsets are non-refundable — they can reduce your tax to zero but won't create a refund. However, some offsets like the franking credits from dividends can be refundable.
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