Discover How Proposed Super Changes Could Benefit Millions of Lower Income Workers in Australia

This week, significant changes to Australia’s low-income super tax offset have emerged, promising to benefit millions of workers. The proposed updates to the low-income super tax offset, known as Listo, aim to enhance superannuation savings for lower-income Australians.
Overview of the Proposed Super Changes
The Listo initiative is designed to support workers with low incomes by providing tax concessions on their superannuation contributions. Currently, employees earning $37,000 or less can receive a tax refund of up to $500 to their super account. Under the new proposal, the eligibility threshold will rise to $45,000, aligning it with the second income tax bracket.
Key Changes and Benefits
- The Listo threshold will increase from $37,000 to $45,000.
- Refundable tax contributions will rise to a maximum of $810.
- By 2027, an estimated 770,000 additional individuals will qualify for Listo.
- A projected 1.3 million Australians will ultimately benefit from these changes.
The changes are strategically timed with the planned reduction of the lowest tax rate from 15% to 14% by mid-2027. This adjustment could significantly improve the financial circumstances of those who may otherwise find themselves paying a higher tax rate on super contributions than on their earnings.
Why Changes Were Necessary
The existing Listo program has not undergone updates for eight years, leaving many low-income earners without the tax advantages they were entitled to. According to the Super Members Council (SMC), this stagnation has led to disparities where low-income earners receive minimal tax concessions compared to high earners.
For example, a cleaner earning $42,000 receives only a 1% concession on super contributions, while executives earning over $200,000 benefit from a 30% concession. Without timely adjustments, many workers could face a situation where they pay more tax on super contributions than on regular wages.
Impact on Superannuation and Retirement
Experts estimate that changes to the Listo could provide affected workers with an average additional $410 in their super accounts, potentially leading to an extra $15,000 in retirement savings over time. However, the overall cost to the budget for implementing these changes is projected to be around $430 million.
Critics and Future Considerations
While these updates represent a positive step towards equity in the superannuation system, some experts argue that deeper reforms are essential. Xavier O’Halloran from Super Consumers Australia emphasizes the need for a comprehensive overhaul rather than mere adjustments to the tax system. Additionally, Ben Phillips from the Australian National University echoes these concerns, suggesting that more substantial reforms could better serve workers and bolster future pension schemes.
In summary, the proposed changes to the low-income super tax offset signal a move towards greater fairness in Australia’s superannuation system. By increasing eligibility thresholds and refundable amounts, the government aims to alleviate financial burdens on lower-income earners, ultimately supporting their retirement savings.