- 1. What is the super tax refund?
- 2. Who is eligible for the LISTO?
- 3. What is adjusted taxable income?
- 4. How does the LISTO work?
- 5. Can you give me an example of how the LISTO works?
- 6. What do I need to do to ensure I receive the LISTO?
- 7. How long do I have to wait before I receive the LISTO?
- 8. What if I have retired by the time the government has paid the LISC/LISTO?
- 9. Is there a minimum amount of LISTO that I can receive?
- 10. Where can I find more information about the LISTO?
If you earn less than $37,000, and you, or your employer, makes concessional (before-tax) contributions to your super fund, you may get a refund of up to $500 a year for the contributions tax deducted from the super contributions. Employer contributions are typically compulsory Superannuation Guarantee contributions, but can include other types of concessional contributions. More specifically, if your ‘adjusted taxable income is less than $37,000, and concessional contributions are made to your super account, then you may get a super tax refund. An explanation of the meaning of ‘adjusted taxable income’ appears later in this article.
This special contribution from the government, originally known as the Low Income Super Contribution (LISC), but now renamed as the Low Income Superannuation Tax Offset, was originally payable only for the 2012/2013, 2013/2014, 2014/2015, 2015/2016 and 2016/2017 years. The LISC has been extended indefinitely, and since 1 July 2017, has been renamed the Low Income Superannuation Tax Offset (LISTO).
1. What is the super tax refund?
The Low Income Superannuation Tax Offset (LISTO) is a repayment of the 15% contributions tax paid on the concessional (before-tax) contributions of a person earning below a certain income threshold. The LISTO is subject to a maximum refund of $500. The Low Income Super Contribution (former name of LISTO) took effect from the 2012/2013 financial year, which means the contributions tax deducted from any concessional contributions made on or after 1 July 2012, would be potentially refundable. If you were eligible, the LISC was paid into your super account. Since 1 July 2017, the same rules apply, but the refund is called the Low Income Superannuation Tax Offset (LISTO).
2. Who is eligible for the LISTO?
You are eligible for the LISTO, if you satisfy the following conditions:
- you have concessional (before-tax) contributions made to a complying super fund by your employer, or yourself during applicable financial years, namely during the 2017/2018 year, or 2018/2019 year, or future financial years.
- your ‘adjusted taxable income’ for the financial year is $37,000 or less. There are no plans to index the income threshold of $37,000, since it is linked to the marginal rate of income tax threshold.
- 10% or more of your ‘total income’ for the financial year is sourced from business or employment (this condition was added very late in the day to reduce the number of Australians eligible for the LISC/LISTO).
- you are not a temporary resident (according to the ATO, this means that you are not a holder of a temporary resident visa and note that New Zealand citizens in Australia are eligible for the LISC/LISTO).
- According to the ATO, your LISC/LISTO entitlement is $10 or more (and if less than $10, your LISC/LISTO entitlement will be rounded up to $10). Since 1 July 2017, the minimum payment is slightly different. Rather than rounding up to $10, the government will only pay a LISTO if your entitlement is $10 or more.
3. What is adjusted taxable income?
Just to make it complicated, adjusted taxable income is a contrived definition to ensure that Australians don’t manipulate their financial circumstances to try to become eligible for the LISC. According to the legislation, ‘adjusted taxable income is:
- your taxable income (what appears on your tax return)
- adjusted fringe benefits amount (total reportable fringe benefits amount x 0.535)
- tax-free government pensions or benefits (this does not include private tax-free super pensions)
- reportable super contributions: that is, reportable employer super contributions (such as salary sacrifice contributions, but not SG contributions), and deductible personal super contributions
- total net investment loss (that is net investment loss from rental property investments, and net loss from other financial investments)
- target foreign income (foreign income not already included in your tax return)
- deductible child maintenance expenditure (child support payments).
Note: If an individual does not need to lodge an income tax return, the ATO will assess an individual’s eligibility for LISTO based on information available to the ATO, typically at the end of at least 12 months after the end of the relevant financial year.
4. How does the LISTO work?
The LISTO process is supposed to work something like this:
- Your super fund must have your tax file number.
- You or your employer makes a concessional contribution during the financial year. If you’re employed, that will automatically include your employer’s Superannuation Guarantee contributions. If you negotiate a salary sacrifice arrangement, then those contributions may also be eligible for the LISTO, although note that those salary sacrifice contributions are counted back when working out your adjusted taxable income.
- If you lodge an income tax return, the ATO will use the information in your tax return to calculate your adjusted taxable income.
- If you don’t have to lodge a tax return, you still don’t have to do much. The ATO will work out your adjusted taxable income, and hence your eligibility, from other sources.
- The ATO has published more details on the process of eligibility and payment on the ATO website (click on this link).
5. Can you give me an example of how the LISTO works?
In the past, the ATO has provided one example on how the former LISC works, but the rules are the same for LISTO. We have updated the extract to reflect the 2018/2019 year, and the renamed LISTO.
Julie earns $36,000 a year as a child care assistant. In the 2018/2019 financial year, Julie’s employer makes a super guarantee contribution of $3,420 into her super fund. Julie lodges an income tax return which includes tax deductions of $1,000, resulting in an adjusted taxable income of $35,000 ($36,000 – $1,000). The table below shows how Julie worked out whether she was eligible for a LISTO.
Under the LISC, Julie will receive the maximum Low Income Superannuation Tax Offset of $500 (15% of $3,240 equals $513), paid into her super fund.
How Julie worked out she was eligible for a LISC
Criteria met? Amount Super fund has my tax file number? Yes Made concessional super contributions? Yes $3,420 Had an adjusted taxable income of $37,000 or less? Yes $35,000 Received at least 10% of income from employment, business or a combination of both? Yes Had not held a temporary resident visa during the year? Yes Eligible for a LISC payment of more than $10 for the financial year? Yes
Note: For the 2016/2017 financial year, your LISC entitlement must be $10 or more (or will be rounded up to $10), for the government to pay the LISC into your super account (or paid to your directly if you have since retired). Since 1 July 2017, your LISTO entitlement must be $10 or more for the government to pay the LISTO into your super account.
6. What do I need to do to ensure I receive the LISTO?
You do not need to do anything in particular. According to the ATO, if you’re eligible and you lodge an income tax return for the financial year, your LISC/LISTO will be paid into your super account when the ATO has processed your tax return for that financial year, and also when the ATO has received information from your super fund about the level of contributions paid into your super account over the financial year.
If you don’t lodge a tax return, the ATO will work everything out from the super contributions information received from your super fund and from information the ATO collects from other sources and agencies.
7. How long do I have to wait before I receive the LISTO?
The short answer is: a long time! According to the ATO, the process can take up to 14 months from the end of the financial year in which the super contribution was paid. When the LISTO is paid into your account, the payment will appear on the member statement that your super fund sends you each year.
8. What if I have retired by the time the government has paid the LISC/LISTO?
If you have retired (and have reached your preservation age – age 55 if born before July 1960, age 56 if born after June 1960 and before July 1961, and at least 57 years if born on or after 1 July 1961, and up to 60 years if born after June 1964) from the workforce, or you’re aged 65 or over (even when you’re still working), you can apply to have the LISC/LISTO paid directly to you, rather than paid into your super account. The form to enable the direct payment of the LISC/LISTO is available on the ATO website click here to access the form).
9. Is there a minimum amount of LISTO that I can receive?
Before July 2017, if your LISC entitlement was less than $10, then your LISC entitlement would be rounded up to $10. Since 1 July 2017, for administrative efficiency and to reduce costs for the government and super funds, the government has decided that your entitlement must be $10 or more before you get paid LISTO (in place from July 2017). The maximum amount of LISC/LISTO that you can receive is $500.
10. Where can I find more information about the LISTO?
You can find more information on the LISC in the SuperGuide article LISTO: Super tax refund for lower-income earners, or by visiting the ATO website. You may also want to check out your super fund’s website which may have information on how the LISC operates.