What is a tax offset?
Understand what a tax offset is and how it differs from a tax deduction.
Summary
A tax offset may reduce the amount of tax payable after tax has been calculated. This is different from a deduction, which generally reduces taxable income.
What this means
Tax offsets can apply in specific circumstances and may be refundable, non-refundable, or subject to eligibility rules. The ATO provides guidance on different offsets.
Because offsets work differently from deductions, it is important to check the specific offset rules rather than assuming it works like an expense claim.
Typical actions
- Identify whether a tax offset may apply.
- Check eligibility conditions on the relevant ATO page.
- Keep supporting records where required.
- Review your tax return calculation before lodging.
Official ATO sources
Last checked: 20 June 2026
Tax offsets
Explains tax offsets and links to offset categories.
Tax time definitions
Provides definitions for tax return terms.
Records you need to keep
Explains records needed to support tax return claims.
Related questions
- What is a tax deduction?
- What is taxable income?
- What is the Medicare levy?
- What records should individuals keep for tax?
Important notice: Tax Clarity is an independent information tool. This page provides general information based on official sources. It does not provide tax, legal, financial, or accounting advice. Tax rules can change, and how they apply depends on your circumstances. For advice about your situation, speak with a registered tax agent or qualified professional.
Need help understanding this in plain English?
Try the Tax Clarity App for a plain-English answer.