Improving incentives in the tax system
Hamish has just started out as an apprentice carpenter, and earns around $29,000 a year.
He is entitled to the full $1,500 of the LITO, and currently receives $750 through the year. He gets the remaining $750 of the LITO that he is entitled to in a cheque from the ATO after he puts in his tax return.
From 1 July 2011, Hamish will get an additional $300 through the year (or $11.54 per fortnight) in his pay. Hamish will still get the remaining $450 of his LITO entitlement after the end of the tax year.
Realising the benefits of the Low Income Tax Offset (LITO) sooner
From 1 July 2011 the Government will increase the maximum amount of LITO delivered during the year through workers' regular pay to $1,050, an increase of up to $300 a year for over 6.5 million taxpayers.
This change will mean more money for low‑and middle‑income earners week‑on‑week, improving the immediate rewards for work and helping with cost of living pressures.
Phasing out the Dependent Spouse Tax Offset (DSTO)
The Government will tighten eligibility for the DSTO so that it is no longer available for people with a dependent spouse who is 40 or under on 1 July 2011. People with dependent spouses who are carers, invalid, permanently disabled and selected other groups will not be affected.
These changes reduce disincentives to participate for people who are well placed to benefit from the employment prospects presented by a strong economy.
Additional LITO assistance will be provided during the year
Source: Treasury.