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Australia Tax Offsets and Tax Rebates

Tax offsets (sometimes referred to as rebates) directly reduce the amount of tax payable on your taxable income. In general, offsets can reduce your tax payable to zero, but on their own they can't get you a refund.

Health insurance

Your entitlement to a private health insurance rebate or tax offset depends on the age of the oldest person covered by your policy and your single or family income depending on your family status. If you have private health insurance:

  • The amount of private health insurance rebate you are entitled to receive is reduced if your income is more than a certain amount
  • The ATO will calculate the amount of private health insurance rebate you are entitled to receive when you lodge your tax return

You can claim your private health insurance rebate as a:

  • Premium reduction, which lowers the policy price charged by your insurer
  • Refundable tax offset through your tax return

This may result in you receiving a tax offset or a liability, depending on:

  • How you claim your rebate
  • The level of rebate you have claimed for your policy
  • Your income for Medicare levy surcharge purposes

Government benefits

The beneficiary tax offset is available if you receive certain Australian Government allowances and payments.

There are two super-related tax offsets for which you may be eligible:

  • Australian super income stream tax offset
  • Tax offset for super contributions on behalf of your spouse only receive any of the qualifying benefits and allowances, and
  • Have no other taxable income.

If you have other assessable income you may still need to pay some tax.

If you have no tax payable, the beneficiary tax offset is not available to be used.

To claim the offset, you must declare the payment you receive at the correct item on your tax return.

Australian super income stream tax offset

If you receive income from an Australian super income stream, you may be entitled to a tax offset equal to:

  • 15% of the taxed element, or
  • 10% of the untaxed element

The tax offset amount available to you on your taxed element will be shown on your payment summary.

There is now a limit on the amount of tax offset you're entitled to on your untaxed element. This is generally limited to $10,000 and will not be shown on your payment summary. Use the Defined benefit income cap tool to work out if you're entitled to a taxed offset on your untaxed element.

You're not entitled to a tax offset for the taxed element of any super income stream you receive before you reach your preservation age unless the super income stream is either a:

  • Disability super benefit, or
  • Death benefit income stream

You're not entitled to a tax offset for the untaxed element of any super income stream you receive before you turn 60 years old unless:

  • The super income stream is a death benefit income stream, and
  • The deceased died after they turned 60 years old

Medical expenses

The net medical expenses tax offset is being phased out.

From 2015-16 until 2018-19, claims for this offset are restricted to net eligible expenses for disability aids, attendant care or aged care.

Net expenses are your total eligible medical expenses minus refunds you, or someone else, received from:

  • National Disability Insurance Scheme (NDIS)
  • Private health insurers.

If you received a reimbursement amount as part of a compensation payment, you do not have to reduce your eligible medical expenses, unless the amount was received from a government, public authority, society, association or fund.

This offset is income tested. If you are eligible for the offset, the percentage of net medical expenses you can claim is determined by your adjusted taxable income (ATI) and family status.

Further Information and Guides for Tax in Australia