If you or your partner are considered low-income earners, you might be in for a nice little surprise known as the Low Income Super Tax Offset (LISTO). In fact, if you blink, you might even miss it.
If you are eligible, you’ll find yourself receiving up to $500. So, are you eligible? And, if so, how do you get your hands on it? Stick around and I’ll show you exactly what you need to do.
What is the Low Income Super Tax Offset?
The Low Income Superannuation Tax Offset is a payment made to low-income earners as a refund of contributions tax to help them save towards retirement.
Contributions tax is a tax levied on all concessional contributions, such as employer superannuation guarantee (SG) contributions and salary sacrifice. The contributions tax rate on concessional contributions is 15%.
The Low-Income Super Tax Offset is effectively saying that low-income earners do not need to pay the first $500 of contributions tax.
Low Income Super Tax Offset Eligibility
To be eligible to receive the Low Income Super Tax Offset remittance, you need to have an adjustable taxable income of $37,000 or less.
Basically, your adjusted taxable income includes your taxable income, plus reportable fringe benefits, plus foreign income, plus net investment losses, plus tax-free government pensions or benefits, plus reportable super contributions.
You also need to have not held a temporary resident visa at any stage throughout the financial year and 10% or more of your total income comes from business and/or employment.
If you earn more than $37,000 you will not be eligible for any Low Income Super Tax Offset.
Low Income Super Tax Offset Amount
If you are defined as a low-income earner, the amount you will receive as a Low Income Super Tax Offset is equal to 15% of the concessional contributions made into your super account for the financial year.
A concessional contribution includes employer SG contributions, salary sacrifice contributions and personal deductible contributions.
The maximum Low Income Super Tax Offset that can be received in any single financial year is $500 per person. If you are eligible for less than $10, then $10 will be received.
Low Income Super Tax Offset Calculator
Use this Low Income Super Tax Offset Calculator to determine how much you are eligible to receive by typing in your adjusted taxable income and your concessional contributions for the year. Then, use the calculator to see if increasing super contributions will provide a higher LISTO.
How to Claim the Low Income Super Tax Offset
Once you complete your tax return and your super fund has provided contribution information to the Australian Tax Office (ATO), the ATO will pay the Low Income Super Tax Offset directly into your super account, so keep an eye out.
If you do not lodge a tax return, the ATO can still calculate your LISTO amount from the information received from your super fund.
In order for all of this to occur, you need to ensure that your super fund has your tax file number (TFN) on record. You should be able to see if this is the case on your superannuation statement or by contacting your superannuation provider.
If you have reached your superannuation preservation age and are retired, or are over age 65, you can apply to have the LISTO paid directly into your bank account.
As you can imagine, you may have already received the Low Income Superannuation Tax Offset sometime in the past and not even known about it, because the whole eligibility and claim process is automated.
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