[Australia] LISTO reforms’ passage will benefit 1.3 million low-income workers

In Australia, Superannuation industry bodies have welcomed the passage of reforms to the low-income superannuation tax offset (LISTO) through parliament, Accountants Daily reports.

The LISTO changes form part of the Building a Stronger and Fairer Super System legislation passed by the Senate on March 10 with the support of the Greens. They increase the maximum LISTO refund from $500 to $810 and raise the income threshold from $37,000 to $45,000.

Under the changes, around 1.3 million low-income workers will reportedly receive new or higher government payments into their super accounts. According to the Association of Superannuation Funds of Australia (ASFA), this brings the number of people receiving the LISTO to 3.1 million, or 1 in 6 Australians with super. 

In future, eligibility for the LISTO will be linked to the upper threshold of the second-lowest tax bracket, and the maximum payment will increase from $500 to $810. 

In addition, the two bills introduce changes to reduce the amount of concessions received by superannuation members with total super balances above $3 million.

James Koval - ASFA chief policy and advocacy officer - stated that the legislation will boost the retirement savings of more than a million Australians by strengthening LISTO for low-income workers while applying a higher tax rate to the investment earnings of those with very large balances.

“The critical point is that super will still be concessionally taxed for every Australian, from the lowest earner to those with $20 million in super. In almost every circumstance, people will pay a lower tax rate on their super investment earnings than they would outside super," Mr Koval said.

"The concession is now smaller for those at the top, but it is still a concession."

The Super Members Council (SMC) has also welcomed the changes. It reportedly said that the legislation will "powerfully lift the retirement incomes of the very lowest paid workers across Australia".

"For a woman who earns the minimum wage across her whole working life, our modelling shows it could deliver up to $60,000 more in her super by retirement – dramatically lifting her income," it said.

Joseph Mitchell - ACTU assistant secretary - said the passage of the reforms was a major win for working people and restores fairness to Australia’s superannuation system. 

“No worker should pay more tax on their super than they do on their wages. This legislation finally addresses that glaring unfairness," he said.

“By fixing the taxation of low-income workers’ super, the government has ensured these workers will retire with more super and the means to enjoy a better life after work."

ACTU said it also welcomed the reining in of tax concessions for those with the largest super balances. 

Mr Mitchell added, "Super is meant to deliver a universal right to a dignified retirement, not operate as a tax minimisation scheme for the ultra-wealthy."

Source: Accountants Daily

(Quotes via original reporting)

In Australia, Superannuation industry bodies have welcomed the passage of reforms to the low-income superannuation tax offset (LISTO) through parliament, Accountants Daily reports.

The LISTO changes form part of the Building a Stronger and Fairer Super System legislation passed by the Senate on March 10 with the support of the Greens. They increase the maximum LISTO refund from $500 to $810 and raise the income threshold from $37,000 to $45,000.

Under the changes, around 1.3 million low-income workers will reportedly receive new or higher government payments into their super accounts. According to the Association of Superannuation Funds of Australia (ASFA), this brings the number of people receiving the LISTO to 3.1 million, or 1 in 6 Australians with super. 

In future, eligibility for the LISTO will be linked to the upper threshold of the second-lowest tax bracket, and the maximum payment will increase from $500 to $810. 

In addition, the two bills introduce changes to reduce the amount of concessions received by superannuation members with total super balances above $3 million.

James Koval - ASFA chief policy and advocacy officer - stated that the legislation will boost the retirement savings of more than a million Australians by strengthening LISTO for low-income workers while applying a higher tax rate to the investment earnings of those with very large balances.

“The critical point is that super will still be concessionally taxed for every Australian, from the lowest earner to those with $20 million in super. In almost every circumstance, people will pay a lower tax rate on their super investment earnings than they would outside super," Mr Koval said.

"The concession is now smaller for those at the top, but it is still a concession."

The Super Members Council (SMC) has also welcomed the changes. It reportedly said that the legislation will "powerfully lift the retirement incomes of the very lowest paid workers across Australia".

"For a woman who earns the minimum wage across her whole working life, our modelling shows it could deliver up to $60,000 more in her super by retirement – dramatically lifting her income," it said.

Joseph Mitchell - ACTU assistant secretary - said the passage of the reforms was a major win for working people and restores fairness to Australia’s superannuation system. 

“No worker should pay more tax on their super than they do on their wages. This legislation finally addresses that glaring unfairness," he said.

“By fixing the taxation of low-income workers’ super, the government has ensured these workers will retire with more super and the means to enjoy a better life after work."

ACTU said it also welcomed the reining in of tax concessions for those with the largest super balances. 

Mr Mitchell added, "Super is meant to deliver a universal right to a dignified retirement, not operate as a tax minimisation scheme for the ultra-wealthy."

Source: Accountants Daily

(Quotes via original reporting)