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It’s getting harder to pocket a tax refund these days, so when the Government is offering one for your super contributions, it’s worthwhile knowing just how you much you are likely to get.
And best of all with the Low Income Superannuation Tax Offset – or LISTO for short – the tax man and your super fund do all the hard work for you.
So what is the LISTO?
The Low Income Superannuation Tax Offset (LISTO) came into effect on 1 July 2017 as a renamed version of the existing Low Income Superannuation Contribution (LISC).
The LISC was originally a policy initiative of the Labor Government introduced in response to findings in the Henry Review into Australia’s tax system. The review argued low income taxpayers should not be paying more tax on their concessional (before-tax) super contributions – like the Superannuation Guarantee (SG) paid by their employer – than their income.
LISC acted as a refund for the extra tax individuals earning up to $37,000 were paying on their super contributions.
LISC was in place from 1 July 2012 until it was renamed LISTO from 1 July 2017.
LISTO: what’s it designed to achieve?
As the super system is designed to encourage Australians to save for their retirement, the tax rate for super savings is lower than for the same income outside super.
LISTO was introduced to avoid the situation where a low income earner pays more tax on their super contributions than if they received the same amount in their take home pay.
Put simply, all SG contributions are taxed at 15% when they go into a super account, but low income earners only pay tax on any amount they earn over $18,201 (in 2018/2019 and 2019/2020 financial years), so by paying 15% on all their SG contributions, they are paying extra tax.
LISTO is designed to refund or offset the tax a super fund pays on the concessional (before-tax) contributions they receive for low income earners.
Often those benefitting from LISTO payments are women working part-time or in low income earning roles. As women, on average, have lower super balances than men at retirement, LISTO payments can be a valuable boost to a super account.
Lifting the lid on LISTO
LISTO acts as a refund for the tax paid on concessional contributions you or your employer make into your super account if your taxable income is less than $37,000.
These concessional contributions include your employer’s SG contributions and any salary sacrifice or personal tax?deductible super contributions.
For example, if your salary is $35,000, your employer is required to make SG contributions into your super account of $3,325 ($35,000 x 9.5% in 2018/2019 and 2019/2020). Your 15% contributions tax on this amount is $500 (which is paid by your super fund). If you are eligible for LISTO, the ATO then automatically refunds this amount into your super account.
This means as a low income earner you pay no tax on your super contributions if you are eligible for LISTO.
LISTO: Am I eligible?
The ATO determines your eligibility for the LISTO and it’s only payable if your annual salary is less than $37,000. (Technically, your salary is considered to be your ordinary time earnings).
To receive the maximum $500 payment of LISTO, your salary or wage needs to be between $35,000 and $37,000.
For super fund members earning under $35,000, you will receive a lower amount of LISTO. For example, if your salary is $32,000, the SG contributions made by your employer into your super account will be $3,040 ($32,000 x 9.5% in 2018/2019). Your super fund will pay tax of $465 ($3,040 x 15%) when the contributions is paid into your account. The ATO will then refund this $465 into your super account as a LISTO payment.
To be eligible for LISTO, you must not have been a temporary resident of Australia for any part of the financial year.
Case study
Preeti worked part-time as an teachers’ aide at a private school during 2018/2019. Her income from this position was $35,000 and the school made concessional (before-tax) contributions into her super account of $3,325 during the year.
As Preeti earns under $37,000, she is eligible to receive the LISTO and the ATO will pay $498.75 into her super account.
Calculating your LISTO amount
A LISTO payment is determined by calculating 15% of the concessional contributions you or your employer pay into your super account. The maximum amount is capped at $500 for each financial year, with the minimum amount being $10. If you are eligible for less than $10, the ATO rounds the payment up to $10.
To work out how much LISTO you may be eligible to receive, try out the low income super amount calculator tool on the ATO’s website. It estimates your eligibility and entitlement to the tax offset based on information about your income and super contributions.
Getting the money: How do you receive LISTO?
The amount of LISTO you are eligible to receive is automatically calculated by the ATO and paid into your super account, so you don’t need to do any paperwork or apply to receive the payment.
Normally, the ATO checks the information provided on your income tax return (such as your adjustable taxable income and concessional super contributions) when you lodge your return after 30 June each year.
The ATO normally makes the first round of LISTO payments several months later during November.
Note: As the LISTO is paid directly into your super account, you need to ensure your super fund has your Tax File Number (TFN) so it can accept a LISTO payment from the ATO.
If you do not lodge a tax return, the ATO will still check if you are eligible for LISTO by using contribution information from your super fund and other income information it collects.
If you have reached your ‘preservation age’ and are retired from the workforce, you can apply to have LISTO paid directly to you. You can request a direct payment either through the myGov online portal or by completing an Application for payment of ATO-held superannuation money form and submitting it to the ATO.
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