One of the biggest changes that may affect tax returns this year is the removal of the Low- and Middle-Income Tax Offset (LMITO) which finished in the 2021–2022 tax year.

“That means that in the 2022–23 financial year clients are not eligible to receive this offset,” Mr Day said.

However, Ms Bruce said some clients may not have been aware of this because it was not built into PAYG withholding tax.

“They may still be expecting to get a tax benefit, after lodging the last financial year's tax return,” she said.

“And when they get a lower tax refund it may come as a shock to some clients.”

She said advisers need to be aware of this in terms of their clients’ cash flow and after-tax position.

Despite the LMITO no longer being available, Mr Day said the $700 low-income tax offset can still be claimed, where a client’s taxable income is below $37,000, or they can receive a partial tax offset if it is below $66,667.

“The practical impact on financial advisor strategies is that for the resident taxpayer, they get the first $18,200 tax-free threshold, but it's important to take the low-income tax offset into consideration,” Ms Bruce said.

“The $700 a low-income tax offset means that resident taxpayers’ effective tax-free thresholds will be increased to $21,884.

“That means when the adviser is recommending salary sacrificing to super strategies and personal deductible contributions, it's important to bear this amount in mind, so that the strategy will not reduce the client’s taxable income to below $21,884, otherwise, the client will end up paying more tax,” Ms Bruce said.

Mr Day said a lot of advisers’ clients will be retired and potentially over or reached their age pension age, and they can actually get the seniors and pensioners tax offset – SAPTO – which also may increase the tax threshold.

However, Ms Bruce added, SAPTO may not be available if advisers are recommending salary sacrificing to super strategy or personal deductible contribution to reduce a client’s taxable income because SAPTO is different to the low-income tax offset.

“When we're dealing with the low-income tax offset it is relatively straightforward - we just needed to look at the client's taxable income which is assessable income minus tax deductions.,” Ms Bruce said.

“Salary sacrificing to super, and personal deductible contributions can effectively reduce the client's taxable income and that can result in a higher amount of low-income tax offset.

“SAPTO is different as it is not based on the taxable income. It’s based on the rebate income instead.

“The rebate income includes the amount salary sacrificed to the super amount, voluntary employer contributions and personal deductible super contributions, which means that if the client’s income is reduced by a personal deductible contribution when the ATO looks at the situation, the ATO will add that personal deductible contribution amount back to the rebate income.

“As a result, this type of deduction (for personal super contributions) or salary sacrifice contributions simply cannot result in a higher amount of SAPTO. So, where the client’s rebate income - the income before we allow for any personal deductible contributions - exceeds the SAPTO cut-off thresholds, then the client just simply cannot get any SAPTO, which means we are dealing with the same effective tax-free thresholds at $21,884.”