Tax Offset (Rebate)
A direct reduction in the amount of tax you owe, different from a deduction which reduces taxable income.
A tax offset (formerly called a rebate) directly reduces your tax payable, dollar for dollar. This is different from a deduction, which reduces your taxable income — the value of a deduction depends on your marginal tax rate, while a tax offset reduces your tax bill by its full face value. For example, a $1,000 tax offset saves you $1,000 in tax, regardless of your marginal rate.
Common tax offsets include the Low Income Tax Offset (LITO, up to $700), the Senior Australians and Pensioners Tax Offset (SAPTO, up to $2,230 for singles), the Private Health Insurance Rebate (if claimed as a tax offset rather than a premium reduction), and the franking credit offset for Australian dividends. Some offsets are refundable (you get cash back if the offset exceeds your tax), while most are non-refundable (they can only reduce your tax to zero).
Franking credits are the main example of a refundable tax offset — if your franking credits exceed your tax liability, the excess is refunded to you. Most other individual offsets are non-refundable, meaning they can't create a refund on their own but can reduce your tax to zero.