We have summarised the key points from the 2021-2022 budget, that we believe will have the most impact on our clients.

Please keep in mind that all budget measures are proposals and will require the passage of legislation to become effective.

Summary points for Individuals

Extension of the Low and middle income tax offset (LMITO) to the 2021-2022 financial year
Removal of the exclusion of the first $250 of self-education expenses
Individual tax residency rules

2021 Federal Budget - Individual Summary

Low and middle income tax offset

The low and middle income tax offset (LMITO) was originally introduced for the 2019 financial year and was extended in the 2021 budget to expire on the 30 June 2021. The LMITO has been extended again to the 30 June 2022.

The LMITO offset amount is between $255 and $1,080 and the amount received is dependant on your taxable income. This is demonstrated in the below table:

Taxable income	Offset
$37,000 or less	$255
Between $37,001 and $48,000	$255 plus 7.5 cents for every dollar above $37,000, up to a maximum of $1,080
Between $48,001 and $90,000	$1080
Between $90,001 and $126,000	$1080 minus 3 cents for every dollar of the amount above $90,000

Source: https://www.ato.gov.au/Individuals/Income-and-deductions/Offsets-and-rebates/Low-and-middle-income-earner-tax-offsets/

Self-education expense deductions

To reduce compliance costs and simplify the income tax return the Government is removing the exclusion of the first $250 of deductions for prescribed courses of education. This measure will apply for the first income year after Royal Asset.

Individual tax residency rules

The government is proposing to replace the individual tax residency rules with a new easier to understand framework to provide certainty and reduce compliance costs for globally mobile individuals and their employers.

Primary Test - A person who is physically present in Australia for 183 days or more in any income year will be an Australian tax resident.
Secondary tests – Will depend on a combination of physical presence and measurable, objective criteria.

These changes will apply from 1 July following Royal Assent.