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The super peak body is advocating for an increase in the upper threshold of the low-income superannuation tax offset.
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ASFA calls for super tax changes for low income earners
10 February 2025
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8 minute read
The Association of Superannuation Funds of Australia (ASFA) is proposing an increase in the upper threshold of the low-income superannuation tax offset (LISTO) in a push for greater fairness.
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The proposal, made in its 2025–26 pre-budget submission, would provide a more appropriate tax incentive for low-income earners, according to ASFA.
The body suggested that the upper threshold of the LISTO be increased from $500 to $810 a year based on the current tax threshold.
Due to changes in income tax brackets, individuals on incomes between $37,000 and $45,000 currently receive only a small tax concession in regard to their superannuation, which is a concession that is less than applies to those with incomes below or above that income bracket.
ASFA CEO Mary Delahunty said the super peak body was calling on the federal government to focus on measures in the upcoming budget that would improve fairness for superannuation consumers.
Delahunty said those on lower incomes needed more, which the government could achieve by building on the stability and strength of Australia’s superannuation system.
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“It’s important to acknowledge that the superannuation system is working well on behalf of the 17 million Australians with superannuation accounts, and delivering strong retirement outcomes for millions of Australians,” she said.
“Super builds our prosperity. It delivers greater financial security for retirees, stable capital for investment and economic resilience for the country.”
In its pre-budget submission, ASFA also recommended that the government review superannuation treatment payments owed by insolvent employers.
The body said it recommended unpaid superannuation guarantee entitlements when an employer became insolvent to be included in the definition of unpaid ‘employment entitlements’ for the purposes of the Fair Entitlements Guarantee.
The submission noted: “Compulsory superannuation contributions are part of an employee’s remuneration and are vital for achieving dignity and stability in retirement.”
The super body highlighted it would support fully funding the ATO to pursue employers who failed to pay the required superannuation guarantee contribution to their workers.
Delahunty said with the upcoming introduction of payday super, it would be easier for employees to keep track of their payments and harder for ongoing underpayment or nonpayment to occur.
“The problem of non-payment of superannuation should also be addressed by the government providing additional support to the ATO so they can undertake greater compliance activity,” she said.
“The non-payment and underpayment of superannuation by employers risks the retirement income of millions of Australians – it’s equivalent to wage theft and has significant impacts on retirement outcomes.”
In addition to this, ASFA proposed other key recommendations to be considered by the government which included expanding superannuation contributions to all employees under 18, reducing super tax on individuals claiming hardship, facilitating one super account for life, improving housing supply through institutional investment and reducing super tax for employees under the Pacific Australia Labour Mobility scheme.
Delahunty noted the March 2025 budget was an opportunity to build on the strengths of Australia’s compulsory superannuation system while boosting fairness and financial security in retirement for individuals on lower incomes, especially women.
“If adopted, ASFA’s budget recommendations would lead to better retirement outcomes for Australians, particularly low-and middle-income earners,” Delahunty said.
“Importantly, these reforms would align with the recently legislated objective of superannuation, which enshrines the purpose of superannuation as to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way.”
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