Superannuation Reforms for Low-Income Earners — LISTO Threshold Increase and Equity Measures

Joanna Lu
8 hours ago
3 min read

The Australian Government has announced a series of superannuation reforms aimed at strengthening fairness and sustainability within the retirement system. The reforms focus on raising the Low Income Superannuation Tax Offset (LISTO) income threshold and maximum offset, while also improving tax equity for individuals with very high superannuation balances.

These measures complement other major initiatives such as “Payday Super” (super contributions paid with each salary cycle) and superannuation payments during paid parental leave, all designed to create a stronger and fairer super system.

What is LISTO?

The Low Income Superannuation Tax Offset (LISTO) is a government initiative designed to ensure that low-income earners are not disadvantaged by the 15% contributions tax applied to concessional (before-tax) super contributions.

Under LISTO, eligible individuals receive a 15% refund of their concessional contributions (made by themselves or their employer) up to a maximum of $500. The offset ensures that low-income earners do not pay more tax on their super contributions than on their take-home income.

Current Rules

Annual income ≤ $37,000
LISTO amount = 15% of concessional (before-tax) contributions (maximum $500)
Minimum payment: $10

Proposed Reform (Effective from 1 July 2027)

Annual income threshold increased to $45,000
Maximum LISTO offset increased to $810

Eligibility Criteria

You may be eligible for LISTO if you:

Earn less than $37,000 per year;
You or your employer makes concessional (before-tax) contributions to a complying superannuation fund during the financial year (including Superannuation Guarantee contributions); and
You were not a temporary resident at any time during the financial year (New Zealand citizens living in Australia are eligible).

Example: Determining LISTO Eligibility

Julie works as a childcare assistant and earns $32,000 per year. In the 2022–2023 financial year, her employer contributed $3,360 in superannuation on her behalf. Julie’s tax return includes a $1,000 deduction, bringing her adjusted taxable income to $31,000 ($32,000 – $1,000).

Because Julie meets all eligibility criteria, she qualifies for the maximum LISTO payment of $500 (as 15% of $3,360 = $504, capped at $500), which is deposited directly into her super fund.

Supporting Reforms--Beyond Low-Income Benefits

This initiative is part of a wider structural reform package aimed at enhancing fairness within the higher end of the superannuation system.

New Tax Rate Structure for High-Balance Accounts (from 1 July 2026)

Balances between $3 million – $10 million: taxed at 30% on earnings
Balances over $10 million: taxed at 40% on earnings
Thresholds will be indexed to inflation
Impact is minimal — estimated to affect only 0.5% of Australians

Other Related Measures

Payday Super (from 1 July 2026): Employers will be required to pay super contributions at the same time as salary payments.
Paid Parental Leave Super Contributions: The government will make super payments during paid parental leave, helping close the gender gap in retirement savings.
Superannuation Guarantee (SG) increases to 12%: It was fully implemented on 1 July 2025, strengthening long-term retirement savings.
Legislating a Clear Superannuation Objective: Establishing a statutory framework for the purpose and social role of superannuation.

Who Will Benefit from These Changes

Low-income earners: Higher LISTO payments will deliver greater tax refunds, increasing retirement savings.
Middle and high-income earners: No direct change, though the SG increase supports long-term wealth accumulation.
High-balance individuals: Higher earnings tax rates will slightly reduce concessions for balances above $3 million.
Women and part-time workers: Women represent approximately 60% of LISTO recipients. The addition of parental leave super payments will further improve gender retirement equality.

Conclusion

These reforms highlight the Australian Government’s commitment to balancing social equity and fiscal sustainability. By raising the LISTO threshold and redesigning tax concessions for high-balance accounts, the superannuation system will become stronger at the bottom and fairer at the top.

For everyday workers, this means more meaningful retirement savings.

This marks a move toward a fairer and more sustainable future for the superannuation system.

Source from: ATO & Treasury Ministers