PM ponders extension of low and middle income tax offset

By

November 16 2021
Share

Scott Morrison has hinted that a popular tax-saving measure may return in 2022.

Scott Morrison low and middle income tax offset

The federal government has teased the possibility of extending its popular tax offset ahead of the next election.

In a recent interview with The Herald Sun, Prime Minister Scott Morrison played coy when asked whether the current federal government would consider extending the low and middle income tax offset (LMITO).

Introduced as part of the federal government’s tax cut agenda in 2018, the measure gives eligible Australians a tax benefit of up to $1,080 when they lodge their return on time. It was originally due to expire in 2020 but was extended in the wake of the COVID-19 pandemic.

The low and middle income tax offset is currently slated to expire on 20 June 2022.

While the Prime Minister refused to commit to extending the tax-saving measure, he didn’t rule it either.

Mr Morrison insisted that a decision about the offset would be made at “an appropriate time” but emphasised the current government’s track record for delivering tax cuts.

“If you really want people and business to get on and do things, you can’t keep more of what they earn; it has to go back the other way,” he said.

Speaking to nestegg, CPA Australia senior manager for tax policy Elinor Kasapidis reminded consumers that the measure was always intended to be temporary.

“It was due to be removed when the Phase 2 income tax cuts began but was continued to help low- and middle-income earners through COVID-19,” she said.

Ms Kasapidis said that repeated extensions of the LMITO have created the expectation that it will be maintained.

“This makes it harder for government to remove it, especially heading into an election year,” she said.

Acknowledging the ongoing economic uncertainty, Ms Kasapidis said that extending the LMITO for another year would be a reasonable step by the federal government.

“Continuing this relief would give many hard-hit Australian workers a bit more breathing room,” she said.

H&R Block director of tax communications Mark Chapman told nestegg that much of the media coverage around this has focused on Scott Morrison’s attempt to claim that he is delivering a tax cut by maintaining the low and middle income tax offset.

“He isn’t. Scott Morrison is simply proposing to defer a tax rise, one that he and his government have already legislated,” Mr Chapman said.

He noted that Mr Morrison and the federal government had not made the offset a permanent feature of the tax system. They’ve just talked about extending it.

“This raises the possibility that this is all spin, designed to see the government through the general election, at which point they will return to the already legislated abolition of the offset in 2023 or later,” he said.

About the author

Fergus is a journalist for Momentum Media's nestegg and Smart Property Investment. He likes to write about money, markets, how innovation is changing the financial landscape and how younger consumers can achieve their goals in unpredictable times.

About the author

Fergus is a journalist for Momentum Media's nestegg and Smart Property Investment. He likes to write about money, markets, how innovation is changing the financial landscape and how younger consumers can achieve their goals in unpredictable times.

sections

most read

sections

most read

sections

most read

sections

most read

sections

most read

sections

most read

sections

most read

Most read

Age Pension increase prompts Australians to review their finances

Latest Podcast

Employee satisfaction dips as Australian workplaces tackle retention challenges

Resources

There is $17.5 billion in lost and unclaimed super across ...

Earn