What is a Low Income Super Tax Offset?

Everyone wishes to have a happy retirement and have something to look forward to in their retirement years. However, if you are a low-income earner, this may not be a pleasant thought for you.

The good news is that the Australian government has come up with some great programs to handle such worries. This is where the Low Income Super Tax Offset (LISTO) comes in to help.

Overview of the Low Income Super Tax Offset

The LISTO is a government initiative that provides a refundable tax offset for low-income earners with taxable superannuation contributions. In essence, if your taxable income is $37,000 or less, the government will contribute $500 to your super account.

This is meant to cover the low earners who may have a hard time saving for their retirement. The offset is capped at $500 and is available to both individuals and couples.

How do I qualify for the Low Income Super Tax Offset?

To qualify for the LISTO, there are some requirements that you must meet. Please note that the criterion is mandatory for the LISTO to be applicable. The requirements are:

  1. You have an annual income of less than $37,000 in a given financial year.
  2. You or your employer makes the pre-tax superannuation contributions into a super fund. The contributions include the assured super amount, which most employers pay with the wages.
  3. You must have a Tax File Number for your super fund
  4. At least 10% of your total income is realized from business or employment activity.
  5. You should not have held a temporary resident visa during the specific financial year.

All these FIVE requirements are compulsory so as to become eligible for the LISTO.

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    What is the amount I will receive under LISTO?

    The maximum offset an individual can receive is $500. The amount you get is calculated based on your taxable income and contributions made to your super fund. On the other hand, the minimum amount is $10. In the event that the amount due is less than $10, the government will round it off to $10.

    The amount of offset you will receive is calculated as 15% of the amount of the pre-tax super contributions that you or your employer has been making to your super fund.

    For instance, if you make $22,000 in taxable income and $1,200 in concessional contributions during a financial year, you will get an offset of $180. The calculation is done as follows:

    15% of $1,200 = $180

    On the other hand, if you make $36,000 in taxable income and $1,200 in concessional contributions during a financial year, you will get the maximum offset of $500.

    How is the Low Income Super Tax Offset paid?

    The LISTO is a refundable tax offset. This means that if your super fund owes you money, the amount of offset will be used to reduce the amount you owe. If after the calculation you are found not to owe any money to the super fund, the ATO will pay the offset amount directly into your super account.

    It is important to note that the LISTO is paid by the Australian Taxation Office.

    When will I receive the Low Income Super Tax Offset?

    The ATO (Australian Taxation Office) will calculate the LISTO amount when they process your tax return. If you have already filed your tax return and are expecting the offset, you will receive it automatically in your super account.

    If you have not filed your tax return, you need to do so as soon as possible. The sooner you file, the sooner the ATO will calculate the LISTO amount and send it to your super account.

    The tax experts at Accurate Business & Accounting Services are always ready to assist with your LISTO and other tax matters. Talk to us today!