One part of our super system has been frozen for 13 years – and low-paid workers are missing out.
We all know that when something’s out of date, you fix it.
Whether it’s wages, broken laws, or Superannuation — we update things to keep them fair for everyone.
But the Low Income Super Tax Offset (LISTO) has been frozen since 2012. The tax refund was designed to top up the super of low-paid workers and level the playing field. Because it hasn’t kept up, more than a million workers are being left behind.
For some workers in a low paying job it could mean having up to $60,000 less by retirement.
It’s a simple fix — and it’s long overdue.
What is the LISTO?
Super was built on a core promise: that contributions would be taxed at a lower rate than income, to reward saving until retirement.
But people on low incomes don’t get this benefit. LISTO was designed to fix that — a tax refund paid back into low-paid workers’ super accounts to help level the playing field.
Why the LISTO needs fixing
LISTO hasn’t been updated for 13 years, while everything else has gone up. It means that each year, fewer workers are eligible for the top-up.
A million workers missing out: Because LISTO’s threshold and rate has been frozen, a million workers are missing out – more than half are women.
Workers losing $60,000: Some workers in a low-paid job until retirement could be short-changed by up to $60,000.
It makes the gender super gap worse: Because most workers missing out are women, freezing the LISTO makes the gender super gap worse.
Who it hurts most
- 1 million low-paid workers are being short-changed.
- 60% are women, who are more likely to be in part-time and casual jobs.
- Most workers are in jobs in heath and aged care, early childhood, retail, hospitality and cleaning.
It’s about to get worse
Soon 1 in 3 Australians will pay more tax on their super than on their wages.
In 2027 the Government’s tax cuts will lower income tax rates to 14% for earnings up to $45,000 — but super will stay taxed at 15%.
It will mean that a huge 4.5 million workers will be worse off, breaking one of super’s core promises. Take Sally, a cleaner earning $42,000: she’ll pay more tax on her super than on her wages — while someone on $220,000 gets a 30% tax cut.
The solution is simple
Fixing LISTO is straightforward and brings it into line with everything else which is indexed and updated:
- Lift eligibility from $37,000 to $45,000
- Increase the refund cap from $500 to $810 to match the 12% Super Guarantee.
It’s an investment that would boost the retirement savings of over 1 million low-paid workers — giving them a fairer, more secure retirement.