Saving for retirement isn't always easy if you're on a low income, but the low-income super tax offset (LISTO) is a government scheme that could help boost your nest egg.
What is the low-income super tax offset?
The LISTO is a super payment that the government makes to help people with low incomes save for their retirement. Think of it as a refund from the government for some of the tax that you pay on the money going into your super account.
The aim of the LISTO is to help eligible low-income earners save more for retirement by effectively refunding the 15% tax paid on their concessional contributions, up to a certain amount. The LISTO can be beneficial for those who work part-time, casually, or have irregular income, as it can be extra hard for them to save for retirement.
Significantly, the Government recently announced it plans to make changes to the LISTO scheme – which means more people than ever before could benefit from it soon.
How much can I get under the low-income super tax offset?
The LISTO is 15% of your before-tax super contributions you or your employer pays into your super fund. The maximum LISTO payment an eligible person can get in a financial year is $500 while the minimum is $10. If you're eligible for less than $10, the Australian Tax Office (ATO) will round up your LISTO amount to $10.
Keep in mind that it's not a recurring payment – you may be eligible one year and not the next. The amount an eligible person receives depends on how much they earn and the concessional contributions they have received in the financial year.
If you need help working out whether you’re eligible for the LISTO and how much you could receive, the ATO’s LISTO calculator is a good place to start.
Am I eligible for the low-income super tax offset?
To be eligible for the LISTO, you need to meet all of the following requirements:
you or your employer make concessional (before-tax) contributions to your super fund in the financial year. This includes super guarantee amounts.
you earn $37,000 or less in a year (see Income tests).
you weren’t on a temporary resident visa at any time in the year (except New Zealand citizens in Australia).
you lodge a tax return, and 10% or more of your total income comes from employment and/or business, or you don't lodge a tax return and 10% or more of your total income comes from your employment.
If you're eligible for the LISTO, you don't need to do anything to receive it. The government will automatically pay it directly into your super account. In fact, you might have already received the LISTO at some point in the past without even realising it.
LISTO is worked out after you submit your tax return. If you don't submit a tax return, the ATO will use information from your super fund and employer to work out if you're eligible for the payment.
However, you should make sure your super fund has your tax file number (TFN). This is because your super fund won't be able to accept the LISTO payment without your TFN.
So, if you're eligible for the LISTO, it's a good idea to check with your super fund to make sure they have your TFN on file, so that you can get the support you're entitled to in saving for your retirement.
Tip:
If you’re a Rest member, you can provide your TFN by logging in to MemberAccess.
How is the LISTO changing?
The LISTO was designed to help strengthen retirement savings for the people who need it most but the income threshold hasn’t kept pace with super guarantee and income tax settings. This means some people have been missing out - paying more tax on their super than they do on their take-home pay.
That’s why Rest and other advocates have been calling for the LISTO settings to be adjusted. And things are now set to change. The Government recently announced it plans to raise the LISTO threshold from $37,000 to $45,000 and increase the annual LISTO cap from $500 to $810 from 1 July 2027.
These changes are not yet law. But if they are legislated and pass parliament as planned, thousands more Australians will be eligible for the super-boosting payment scheme.
Under this scheme, the government may make a super co-contribution into an eligible person’s super account when they make a personal after-tax contribution, up to a maximum amount of $500. The scheme is designed to help low and middle-income earners boost their retirement savings.
It's important to note that the LISTO is separate from the government co-contribution scheme. It’s possible to be eligible for both the LISTO and the government co-contribution if you meet all the requirements for both schemes.
Watch: Learn some great ways to give your super some love with this Super Simple Chat
