Superannuation peak body ASFA has welcomed the Government’s announcement that it is taking action to improve the retirement outcomes of low-paid workers through changes to the Low-Income Superannuation Tax Offset (LISTO).
The proposed LISTO changes have the potential to add around $15,000 in today’s dollars to the super balances of 1.3 million low-earning Australians at retirement, 60 per cent of whom are women.
“We’re delighted the Government has listened to the super sector’s consistent calls for the LISTO to be reformed. These changes will make a material difference to the retirement prospects of 1.3 million Australians, and make our super system fairer for low-income workers,” said ASFA CEO Mary Delahunty.
The Government’s proposed reforms will raise the LISTO eligibility cap from $37,000 to $45,000 and boost the maximum payment from $500 to $810, taking effect from 1 July 2027. This will ensure that people earning under $45,000 a year are not penalised with higher tax inside super than outside of super.
The average increase in the LISTO payment for affected workers will be $410, with a potential benefit of around $15,000 (in today’s dollars), depending on an individual’s income over time.
“Super offers working Australians a deal: if you put money away to support yourself in retirement, and reduce your reliance on the age pension, you get a tax concession. Currently, for many of the lowest-earning Australians, the deal isn’t working because their tax rate is higher on super than on take-home pay.
“Giving people on low incomes a higher tax offset will mean they are less disadvantaged by taxation on super,” Ms Delahunty said.
Changes to super at the top and bottom will make the system fairer
Combining the LISTO changes with proposed increases to concessional tax rates for earnings on high-balance super accounts will make the super system fairer and more sustainable in the long-term.
“It’s vital that the super system is equitable and sustainable, and the changes proposed today by the Treasurer are important moves to achieving those goals,” said Ms Delahunty.
“The proposed changes to tax concessions on earnings in accounts with more than $3 million and $10 million will require Australia’s superannuation funds to do extra work, but we will work with Treasury and the ATO on behalf of the sector to make sure the changes are smooth and achievable for our member funds,” she added.
“We look forward to taking part in Treasury’s consultations on behalf of the sector, to ensure these proposals for a fairer super system are enacted.”
What is LISTO and how is it changing?
- The Low-Income Superannuation Tax Offset is a government payment made directly to the super funds of eligible low-income earners.
- The LISTO corrects the “tax penalty” where super contributions would be taxed at a higher rate than the individual’s marginal tax rate on take-home pay.
- The maximum eligibility cap on yearly income for the LISTO has been $37,000 since 2012. The Government’s proposal would raise this to $45,000.
- The maximum LISTO payment an individual can receive has been $500 since 2012. The proposal would raise this to $810.
Key points of proposed changes to large account balances from 1 July 2026:
- An additional tax would be payable on the investment earnings generated by the portion of an individual’s total superannuation balance (TSB) that exceeds $3 million, affecting around 0.5 per cent of Australians with super.
- Earnings from the portion of the TSB over $3 million would be taxed at a concessional rate totalling 30 per cent. The portion under $3 million would continue to receive the current concessional rate of 15 per cent on investment earnings (or nil for balances associated with pension accounts).
- Unrealised capital gains will be excluded when calculating investment earnings for tax purposes.
- A higher tax rate totalling 40 per cent would be payable on earnings from the TSB portion exceeding $10 million, affecting around 8,000 Australians (around 0.1 per cent).
- The balance thresholds for the higher concessional rates ($3 million and $10 million) will be indexed in connection with the Transfer Balance Cap.
Key statistics relating to super taxation in Australia
- Currently, less than 0.5 per cent of Australians with super hold more than $3 million in their accounts. Around 60 per cent of these individuals are male.
- Around 8,000 Australians hold more than $10 million in super, representing less than 0.1 per cent of Australians with super.
- Approximately 100 individuals with super balances exceeding $50 million are currently taxed at the concessional rate of 15 per cent.
- Following the proposed changes to the LISTO, 3.1 million Australians will be eligible for the low-income top-up payment. Over 770,000 additional individuals will become eligible for the LISTO, and 490,000 will receive a higher payment.
- Of the 1.3 million Australians who will benefit from the proposed changes to the LISTO, 60 per cent will be women.
For further information, please contact:
ASFA media team
0451 949 300
mediaunit@superannation.asn.au
About the Association of Superannuation Funds of Australia (ASFA)
ASFA, the voice of super, has been operating since 1962 and is the peak policy, research and advocacy body for Australia’s superannuation industry. ASFA represents the APRA regulated superannuation industry with over 100 organisations as members from corporate, industry, retail and public sector funds, and service providers. We develop policy positions through collaboration with our diverse membership base and use our deep technical expertise and research capabilities to assist in advancing outcomes for Australians.
We unite the superannuation community, supporting our members with research, advocacy, education and collaboration to help Australians enjoy a dignified retirement. We promote effective practice and advocate for efficiency, sustainability and trust in our world-class retirement income system.