There are several personal tax offsets available to individual taxpayers. Tax offsets are subtracted from the tax calculated on taxable income. In contrast, a deduction is subtracted from assessable income in calculating the taxable income on which tax is payable.

Example

Carrie-anne has a 2016/17 assessable income of $37,500 and deductions of $500. Her taxable income is therefore $37,000 and her gross tax $3,572. She is entitled to a part low income earners rebate of $445. Her net tax is therefore $3,572 − $445 = $3,127.

The tax offsets relate to the taxpayer’s personal circumstances.

Offset/Rebate

Maximum amount for 2016/17

Dependant (Invalid and Carer)

$2,627

Low income earner

$445 (reducible by 1.5 cents for every $1 by which taxable income exceeds $37,000)

Senior Australians and pensioners
Recipients of social security payments and allowances and of certain educational allowances

Rebate levels vary according to taxpayer’s circumstances

Medical expenses

Depending on taxpayer’s and/or family’s adjusted taxable income for rebates, 20% of excess of net medical expenses over $2,299 or 10% of excess over $5,423. Only medical expenses relating to disability aids, attendant care and aged care are rebatable.

Private health insurance

Dependent on age of person(s) covered by policy and income level(s)

Zone rebates

•

Ordinary Zone A

$338 + 50% of relevant rebate amount

•

Ordinary Zone B

$57 + 20% of relevant rebate amount

•

Special Zone A or B

$1,173 + 50% of relevant rebate amount

Overseas defence force
UN peacekeeping force

Same as for Ordinary Zone A

Income arrears
Medicare levy surcharge lump sum arrears

Applicable to lump sum payments of income paid in arrears

Various other tax offsets/rebates are available to individual taxpayers. Examples are:

  •  the offset for shareholders in receipt of franked distributions;
  • the primary producer averaging offset;
  • the rebate for superannuation contributions for a spouse;
  • the tax offsets for research and development;
  • film production.

Generally, the sum of all tax offsets allowable to a taxpayer cannot exceed the amount of tax otherwise payable, and any unused offsets cannot be carried forward to be set off against tax payable in future years. There are, however, exceptions to this rule.