The Albanese government has announced a boost to the low-income superannuation tax offset (LISTO) alongside reforms to make the super system “stronger, fairer and more sustainable”.
Under the proposal, unveiled on 13 October, the LISTO eligibility cap will rise from $37,000 to $45,000, with the maximum payment lifted from $500 to $810 from 1 July 2027 – reflecting the 12 per cent Super Guarantee rate.
Treasurer Jim Chalmers said the change would ensure that low-income workers are not penalised with higher tax inside super than outside.
“This will help deliver a more secure retirement for 1.3 million Australians, around 60 per cent of whom are women, with total eligibility for the offset expanding to 3.1 million people,” Chalmers said.
The Treasurer added that the measure aligns with the government’s 2027 tax cuts and would provide an average $410 annual increase in LISTO payments, translating to a potential retirement benefit of about $15,000 depending on income over a career.
The super sector has broadly welcomed the move. Women in Super chief executive Jo Kowalczyk described it as “a monumental victory for fairness in our super system”.
“For too long, the LISTO has been frozen while the rest of the super system evolved around it. Low-income workers, the majority of them women, have been short-changed by $3 billion since 2020,” Kowalczyk said.
“Today’s announcement corrects this injustice and ensures that Australia’s lowest-paid workers receive the same fair tax treatment on their retirement savings as everyone else.”
Association of Superannuation Funds of Australia chief executive Mary Delahunty said the reform would restore fairness for low-income earners who have been disadvantaged by the existing settings.
“Super offers working Australians a deal: if you put money away to support yourself in retirement, and reduce your reliance on the age pension, you get a tax concession,” Delahunty said. “Currently, for many of the lowest-earning Australians, the deal isn’t working because their tax rate is higher on super than on take-home pay.”
AustralianSuper chief strategy officer Paula Benson congratulated the government for reforms that “make our already world-class super system even more equitable”.
“The Treasurer’s landmark reforms will make super fairer and help Australians build their retirement savings with confidence,” Benson said. “We are long-time supporters of lifting the LISTO to help people who need it most, especially women with low incomes.”
Research from the Super Members Council (SMC) found that women had been disproportionately affected by the freeze since 2012, missing out on $295 million this year alone.
SMC chief executive Misha Schubert said the boost would “make the superannuation system even stronger and fairer for those who need it most”.
“The LISTO boost is a win for low-paid workers, a win for women, a win for key workers, and a win for the principle that every single Australian deserves economic security and dignity in retirement,” Schubert said.
Alongside the LISTO increase, the government will also adjust how tax concessions are applied to large super balances. From 1 July 2026, earnings on balances between $3 million and $10 million will face a 30 per cent concessional rate, while balances over $10 million will attract 40 per cent.
Both thresholds will be indexed in line with the Transfer Balance Cap, and only future realised earnings will be captured under the measure, following Treasury consultation.
According to Treasury, these combined reforms will cost about $4.2 billion over the forward estimates, before delivering an estimated $1.6 billion net saving to the budget in 2028–29.
Chalmers said the reforms maintain concessional treatment for most taxpayers while ensuring super tax benefits are “more equitable and sustainable”.
“Labor built our superannuation system, and we’re making it even stronger,” he said. “We’re increasing LISTO, better targeting concessions, paying super on paid parental leave and introducing payday super to help Australians retire with more.”
