Last week I attempted to show the effect of the low income tax offset (LITO) by creating an amended income tax table. Unfortunately I made a mess of the numbers by mixing the tax table for 2008-09 with the LITO numbers for 2007-08. I have fixed my errors and the revised table is shown below.
As indicated last week this only incorporates the effects of LITO and not the various other rebate schemes such as the Seniour Australians Tax Offset (SATO) or Family Tax Benefits (FTB-A and FTB-B).
For PAYG tax payers only half of the LITO rebate flows directly into their paypacket. The rest comes by the way of a refund after submitting a tax return at the end of the year. This would seem to be a mechanism for making people feel somewhat optimistic in relation to submitting a tax return. Perhaps a way to train young taxpayers to play the game.
I can’t help feeling that the point of all these rebate schemes is to make the tax system more obscure and to help people feel like they are special because there is a rebate scheme for their particular circumstances. If you’re old they give you a rebate (SATO), if you’re young they give you a rebate (LITO) and if you’re in between young and old and raising a family they give you a rebate (FTB).