Low and Middle Income Tax Offset (LMITO)
A now-expired tax offset of up to $1,500 that applied from 2018-19 to 2021-22, providing additional relief to low and middle income earners.
The Low and Middle Income Tax Offset (LMITO, often called the "lamington") was a temporary non-refundable tax offset introduced in the 2018-19 Budget. It provided up to $1,080 initially, increased to $1,500 in its final year (2021-22), for individuals with taxable income up to $126,000. LMITO ended after the 2021-22 financial year and no longer applies.
During its operation, LMITO was available in addition to LITO, effectively providing a double-up of low-income support. At its peak ($1,500 in 2021-22), a taxpayer earning $48,000–$90,000 received both the full LMITO of $1,500 and a partial LITO — a combined offset of over $2,000. This contributed to larger-than-usual tax refunds during those years.
LMITO was replaced, in effect, by the Stage 3 tax cuts from 1 July 2024, which permanently reduced the 19% rate to 16% and the 32.5% rate to 30%. If you are researching older tax years (2018-19 through 2021-22), LMITO should be factored into calculations. For 2022-23 onwards, it does not apply.
How it works
LMITO was a temporary, non-refundable tax offset that sat alongside LITO rather than replacing it, so eligible taxpayers received both in the years it operated. It applied automatically when a tax return was lodged for the relevant income year — nothing extra to claim, the ATO calculated the offset amount from taxable income and reduced the tax otherwise payable accordingly. Because it was non-refundable, LMITO could only reduce a tax bill to zero; it did not turn into a cash refund beyond what had already been paid or withheld during the year. The offset used a sliding scale that started low, built to a maximum band, then tapered out as income rose toward $126,000.
For anyone who lodged returns during the 2018-19 to 2021-22 income years, LMITO would have shown up as an extra reduction in tax payable on the notice of assessment, often making refunds noticeably larger than expected in a way that surprised people who weren't tracking the policy. Tax agents and DIY lodgers using myTax during those years didn't need to do anything special — the offset was built into the calculation engine and applied on assessment. Because it stacked with LITO, taxpayers in the middle-income bands sometimes saw a combined offset well over $2,000 without realising two separate concessions were at work.
LMITO's expiry is the main trap for anyone reviewing old returns or amending a prior-year assessment — it simply does not exist for 2022-23 onward, and applying it to a later year would overstate the refund. Anyone researching what happened to LMITO after it ended is really looking at the Stage 3 tax cuts from 1 July 2024, which permanently reduced marginal rates rather than reviving a temporary offset. People sometimes confuse LMITO with LITO because of the similar name and the fact both apply to similar income bands — LITO is a separate, ongoing offset that did not expire.
Example: LMITO in its final year, 2021-22
A taxpayer earning $60,000 in the 2021-22 income year fell inside the income band that attracted the maximum LMITO of $1,500, on top of a partial LITO entitlement for that income level.
Combined, the two offsets reduced the tax otherwise payable by more than $2,000 for that year — a boost that disappeared entirely once LMITO expired after 30 June 2022, even though the taxpayer's income and LITO entitlement stayed roughly the same the following year.
Related Terms
Low Income Tax Offset (LITO)
A non-refundable tax offset of up to $700 for individuals with taxable income below $66,667.
Tax Offset (Rebate)
A direct reduction in the amount of tax you owe, different from a deduction which reduces taxable income.
Income Tax
Tax levied by the federal government on your taxable income, calculated using progressive tax brackets.
Tax Brackets
The income ranges that determine the rate of tax applied to each portion of your taxable income.