What is it?
- From 1 July 2017, the Government will replace the Low Income Superannuation Contribution (LISC) with the Low Income Superannuation Tax Offset (LISTO).
How does it work?
- The LISTO effectively refunds the tax paid on concessional contributions by individuals with a taxable income of up to $37,000 – up to a cap of $500.
- This avoids the situation where low income earners pay more tax on contributions to superannuation than on their take home pay.
- The amount of the LISTO that an individual is eligible for will be paid into the individual’s superannuation account.
Who is affected?
- It is estimated that around 3.1 million low income earners will benefit from the LISTO, including around 1.9 million women.
[Treasury website – super reforms]
Details from Treasury Factsheet
From 1 July 2017, the Government will introduce the ‘Low Income Superannuation Tax Offset‘.
Those with an adjusted taxable income up to $37,000 will receive a refund into their superannuation account of the tax paid on their concessional superannuation contributions, up to a cap of $500.
In effect, this means that most low income earners will pay no tax on their superannuation contributions.
Low income earners, who are disproportionately women, will benefit from the Low Income Superannuation Tax Offset. This is important because women, on average, have lower superannuation balances than men, despite having higher life expectancies. It is expected that in 2017-18 around 3.1 million people (almost two-thirds of whom are women) will benefit from the Low Income Superannuation Tax Offset.
The Low Income Superannuation Tax Offset will effectively avoid the situation in which low income earners would pay more tax on savings placed into superannuation than on income earned outside of superannuation.
The Australian Taxation Office will determine a person’s eligibility for the Low Income Superannuation Tax Offset and this will be paid into the person’s superannuation account.
[Treasury Factsheet]