Is a WHM who is a resident for tax purposes eligible for low income tax offset?

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(Newbie)Newbie

9 Jan 2022

I have a client who is on a Working Holiday Visa (417, 462), and we have confirmed they are a resident of Australia for tax purposes in their unique situation. They are not from a NDA country, and therefore will be taxed at 15%. When preparing the tax return, it is saying they are eligible for the low income tax offset ($700) and the low and middle income tax offset ($255).

They arrived in Australia and became a resident in October 2020, and started working in April 2021. Does the offsets need to be pro-rated?

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BlakeATO

(Community Support)Community Support

10 Jan 2022

Hi @heyimjoeblow

The only eligibility criteria for the low income tax offset and the low and middle income tax offset is to be an Australia resident for tax purposes, and have income below certain thresholds. If your client is an Australian resident for tax purposes and their income was below $37,000, they'll be entitled for $700 of the low income tax offset, and $255 of the low and middle income tax offset.

The offset does not need to be prorated - we will calculate the amount the client is eligible for when their lodgment is submitted. It will apply in full, even if all their income was only earned in one quarter of the year.

You can read about the low and middle income earner tax offsets on our website.