The budget announcement earlier this month, confirmed low-middle income earners will receive a temporary tax offset for another 12 months, as part of a plan to boost confidence in the economy.
The Low-Middle Income Tax Offset (LMITO) – first introduced in 2018-19 – provides Australians earning between $37,500 and $126,000 with a tax offset of up to $1080.
What this means is that those people have an extra $1080 in their pockets come the end of financial year – for most, a welcome boost.
For many Australians the offset will provide them with some much needed support and provide a strong opportunity to take beneficial action on their personal finances.
MyState’s top tips to help maximise the LMITO
Pay down small debts. If you are in a position to do so, utilise the full capacity of the LMITO to pay down small debts, like credit card balances or Buy Now Pay Later debts. For couples, this could be up to $2160, so being able to chip away at larger totals will help with any interest being accrued on these balances.
Pay yourself. It’s all too easy to forget to add in to your own rainy day fund when you’re focusing on paying for other things. But once the debts are paid down the next most important thing is to focus on building a solid savings nest egg. This way, if you are faced with any un-necessary expenses, it won’t come as a shock to your credit card.
Treat yourself. For those itching for their next holiday, the LMITO could act as a handy boost to the travel fund, enabling the purchase of flights and accommodation at short notice.
Channel your inner DIY professional. Heading into winter, now is a great time to focus on those DIY projects at home you might have been considering. Whether it be a quick re-decorate, a new kitchen, or you’re looking to plough some extra cash into your mortgage offset account, now is the time to consider it.