New bill to unfreeze Low Income Superannuation Tax Offset
A total of 1.3 million of the lowest‑paid workers in Australia are set for a significant retirement savings boost under new superannuation legislation introduced to federal Parliament.
The government's Building a Stronger and Fairer Super System Bill delivers major changes to the Low Income Superannuation Tax Offset (LISTO) and tightens tax concessions for very large super balances.
Under the bill, from July 2027 the LISTO income threshold will rise from $37,000 to $45,000, aligning it with the top of the second income‑tax bracket, while the maximum LISTO payment will increase from $500 to $810.
The payment rates and thresholds will be formally linked to both income‑tax thresholds and the Superannuation Guarantee rate, so they automatically adjust as those settings change over time.
Treasurer Jim Chalmers said the reforms are designed to boost the superannuation savings of low‑income workers and ensure superannuation tax concessions are fairer and more sustainable.
"Our reforms are all about helping workers earn more, keep more of what they earn, and retire with more, while also strengthening Australia's world‑class superannuation system," he said in a statement.
The legislation also moves to better target tax breaks for those with very large super balances, reducing tax concessions on balances over $3 million from July 1, 2026, in line with the government's long‑standing policy.
Gains for lowest‑paid workers
The Super Members Council (SMC), which represents profit‑to‑member super funds, has called the LISTO changes "historic reform" that will "powerfully lift the retirement incomes of the very lowest paid workers across Australia."
SMC said around 1.3 million of the nation's lowest‑paid workers, most of them women, will benefit from the changes.
According to SMC, lifting and unfreezing the LISTO means that for a woman on the minimum wage over her whole working life, the reforms could deliver up to $60,000 more in her super by retirement.
Research cited by the council found 1.3 million workers have collectively missed out on $3 billion in super support since 2020 because the LISTO was frozen, with women making up about 60% of those affected.
SMC CEO Misha Schubert urged MPs and senators to pass the bill quickly.
"Unfreezing the LISTO will give 1.3 million low‑paid workers right across Australia, mostly women, a much stronger retirement and more income to live on every single fortnight," she said in a statement.
"We especially welcome the Government's decision to peg the LISTO payment rates and thresholds with the personal income tax thresholds and the Superannuation Guarantee rate. This will help to protect against the LISTO's value eroding over time."
"We urge all Parliamentarians to pass the legislation swiftly to strengthen economic security in retirement for those who need it most. Low‑income working women across Australia cannot afford to wait."
