Date of article: 1 December 2011
Last updated: 5 December 2011

Low income super and super co-contributions

As part of the Government’s mid-year economic and fiscal outlook, a number of superannuation measures were announced.

Low income superannuation contributions

As previously announced, the low income superannuation contribution (LISC) program will see individuals earning up to $37,000 effectively pay no tax on their superannuation guarantee contributions from 1 July 2012. Under the LISC, the 15 per cent contributions tax will effectively be refunded into their superannuation accounts.

The announcement further simplifies the program to improve take-up:

• Individuals will automatically receive the LISC refund without being required to fill out a tax return or other type of form. The Australian Taxation Office will verify an individual’s income using available data. This change will particularly benefit individuals who are not required to lodge a tax return, given the increase in tax free threshold from $18,200.
• Individuals who receive less than 10 per cent of their income through employment or business will not be eligible. This is in line with eligibility criteria for the co-contribution.
• Individuals will only receive a payment if their LISC entitlement is at least $20.

Superannuation co-contribution halved

While the previous intention was to return the Government co-contribution back to a maximum of $1,500 from 1 July 2014, the announced measure as part of the mid-year economic and fiscal outlook will reduce the matching rate and the maximum payment to $500 from 1 July 2012 (currently $1,000 which was reduced from $1,500). This is to coincide with the commencement of the LISC program.

Reference: Minister for Financial Services and Superannuation, Media Release No 160.

 

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