LISTO Threshold Proposal: Increase From $37,000 to $45,000
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Primary tax-year context: Current Australian tax settings
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On 11 February 2026, the Government introduced legislation to expand the Low Income Superannuation Tax Offset (LISTO). If passed, the changes would take effect from 1 July 2027 and significantly widen the group of Australians who benefit from the offset.
What is LISTO?
The Low Income Superannuation Tax Offset is a government payment into your super fund designed to address a tax anomaly faced by low-income earners.
When you or your employer makes a concessional (pre-tax) contribution to super, the fund pays 15% contributions tax on that money. For high-income earners, this is a bargain — their marginal tax rate is 32.5%, 37%, or 45%, so contributing to super saves them significant tax. But for workers earning below a certain threshold, the situation is different: their marginal income tax rate may be lower than 15%, meaning the contributions tax actually increases their effective tax on that income.
LISTO corrects this. It refunds up to $500 of the contributions tax paid on concessional contributions for eligible low-income earners, ensuring they are not disadvantaged by the super system relative to higher-income workers.
What the legislation proposes to change
The bill introduced on 11 February 2026 proposes two changes to LISTO, both effective from 1 July 2027:
| Current (2025-26) | Proposed (from 1 July 2027) | |
|---|---|---|
| Adjusted taxable income threshold | $37,000 | $45,000 |
| Maximum offset amount | $500 | $810 |
Both the threshold increase and the maximum offset increase are linked to the same legislative package. The LISTO payment is calculated as 15% of total concessional contributions, capped at the maximum offset, and only applies if your adjusted taxable income is below the threshold.
How LISTO is calculated
LISTO equals 15% of the concessional contributions made to your fund in the income year, up to the maximum offset amount.
For example:
- Concessional contributions of $3,400 → 15% × $3,400 = $510 (currently capped at $500; under the proposed change, the full $510 would be payable, with the cap lifting to $810)
- Concessional contributions of $6,000 → 15% × $6,000 = $900, capped at $810 under the proposed new limit
The payment goes directly into your super fund — you do not receive it as cash. The ATO processes LISTO automatically once your tax return is lodged, using information reported by your employer and super fund.
Who would newly qualify under the proposed $45,000 threshold?
The threshold increase from $37,000 to $45,000 brings in a substantial cohort of workers who are currently excluded:
Part-time workers. Many part-time employees earn between $37,000 and $45,000. The current threshold was set at a time when $37,000 represented roughly the full-time minimum wage; it has not kept pace with minimum wage growth.
Workers re-entering the workforce. People returning to work after a career break — often following parental leave or caring responsibilities — frequently start back at reduced hours and earn in the $37,000–$45,000 band.
Young workers and apprentices. Early-career workers and those in apprenticeships or traineeships commonly earn below the proposed new threshold.
Women. The combination of part-time work patterns and lower average earnings means women are disproportionately represented in the income range the expanded threshold would capture. LISTO is one of several super reforms (alongside super on PPL) targeted at reducing the super gender gap.
The connection to super contributions tax
To understand why the maximum offset is proposed to increase from $500 to $810, it helps to understand what it is covering. The current $500 cap corresponds to 15% of the concessional contributions cap when LISTO was originally designed — but the concessional cap has since increased to $30,000 in 2025-26. A worker who makes $5,400 in employer SG contributions (12% of a $45,000 salary) pays $810 in contributions tax. The proposed new $810 maximum is designed to fully cover that tax for workers right at the new threshold.
This means a part-time worker earning $44,000 whose employer contributes $5,280 to super (12% SG) would receive a LISTO payment of $792 into their fund — effectively a full refund of contributions tax — rather than being capped at $500.
What you can do now
The legislation has been introduced but is not yet enacted. The proposed start date is 1 July 2027, giving Parliament time to debate and pass the bill. There is a reasonable chance of passage given the policy has been introduced as part of a broader superannuation package, but the final rules may change.
Steps worth taking now:
- Check whether you currently qualify for LISTO under the existing $37,000 threshold. If you earn below $37,000 and receive employer SG, you should already be receiving LISTO automatically after lodging your tax return.
- Model your position under the proposed rules. If you earn between $37,000 and $45,000, estimate your annual employer SG (salary × 12%) and 15% of that figure to understand what your LISTO payment might be under the new rules.
- If you salary sacrifice, your adjusted taxable income used for LISTO includes salary sacrifice amounts added back under the adjusted taxable income rules. This means salary sacrificing to bring income below the threshold does not automatically qualify you for LISTO in the same way it might reduce other income measures.
Update long-term super plans only after the bill is passed and the final law details are confirmed.
Important caveat
This change is still part of the legislative process. The proposed start date of 1 July 2027, the threshold of $45,000, and the maximum offset of $810 are all based on the bill as introduced in February 2026. Final enacted amounts and technical rules depend on the outcome of parliamentary debate.