The Payment That Cancels Contributions Tax on Low Incomes
The low income super tax offset exists to fix an anomaly: for someone earning below the tax-free threshold, paying 15% contributions tax on employer super would mean paying more tax on money inside super than on the same money in their hand. LISTO refunds that contributions tax up to a capped amount, paid directly into the super account.
- The answer: LISTO refunds 15% of concessional contributions up to a capped amount for people with adjusted taxable income below the threshold.
- The trap: It is paid into your super account, not to you, and it requires the fund to hold your tax file number. Without a TFN the payment cannot be made.
- The recommendation: Check the fund holds your tax file number. That single item is what stops the payment arriving for most people who are eligible and do not receive it.
Where the AI summary above gets this wrong
"Low income earners get a government co-contribution to their super."
That's surface-true. Here's what it misses:
- LISTO and the co-contribution are different measures — LISTO refunds contributions tax on concessional contributions automatically. The co-contribution matches voluntary after-tax contributions and requires you to make one.
- It is paid into super, not to you — The amount goes to the fund and increases the balance. It is not a refund on your tax return and does not appear as cash.
01 What LISTO does
Concessional contributions — employer Superannuation Guarantee, salary sacrifice and personal deductible contributions — are taxed at 15% when they enter the fund. For someone whose income is below the tax-free threshold, that is a higher rate than they pay on the same money outside super.
LISTO refunds that 15%, up to a capped amount, for people whose adjusted taxable income is below the threshold. The effect is that concessional contributions are effectively untaxed for the lowest earners.
The payment is calculated by the ATO from your tax return or from the information available where no return is lodged, and is paid directly into your super account. Nothing has to be claimed.
02 What can stop it arriving
The fund must hold your tax file number. Without one, the fund cannot accept the payment, and it is also required to apply a higher rate of tax to your contributions — so the same omission costs twice.
At least 10% of your income must come from employment or business, which excludes someone living entirely on investment income. And you must be an Australian resident, or a New Zealand citizen, for the year.
Where the account is closed or transferred to the ATO before the payment is made, it goes to the ATO instead and can be claimed from there — one of the balances the search described in the consolidation guide turns up.
Shows: the low income super tax offset payable on your concessional contributions, at 15% up to the capped amount. Ignores: the income threshold test, the 10% employment income test, and residency, all of which have to be satisfied for any payment to be made.
03 How it fits with the other measures
LISTO applies automatically to concessional contributions. The government co-contribution matches voluntary after-tax contributions and requires you to make one, as described in the co-contribution post.
The two can both apply in the same year, to different contributions. Someone earning a modest wage receives LISTO on their employer contributions and can also make an after-tax contribution to attract the co-contribution.
The spouse contribution offset is a third and separate measure, claimed by the contributing partner rather than the receiving one. All three target the same group and none of them replaces the others.
Source: ATO — Super co-contribution
The tax file number is the whole story here. A fund without your TFN cannot receive LISTO, has to tax your contributions at a higher rate, and cannot accept after-tax contributions either. It takes two minutes to check and it is the single highest-return administrative task in Australian super.
FAQ
Will the Low Income Super Tax Offset refund the 15% contributions tax on my super?
Up to a capped amount, yes, where your adjusted taxable income is below the threshold and at least 10% of your income comes from employment or business. It is paid directly into your super account.
Do I have to apply for LISTO?
No. The ATO calculates it from your tax return or from the information available and pays it to your fund. What you do have to do is make sure the fund holds your tax file number.
Is LISTO the same as the co-contribution?
No. LISTO refunds contributions tax on concessional contributions automatically. The co-contribution matches voluntary after-tax contributions and requires you to make one. Both can apply in the same year.
Sources
Regulator references
- ATO — Super for individuals and families · Australian Taxation Office · 2026How super accounts are taxed and reported.Last verified: 2026-09-07
- ATO — Super co-contribution · Australian Taxation Office · 2026The government super co-contribution and the income test that determines it.Last verified: 2026-09-07
Calculator unit tests · the assertions this page's worked example is checked against, and their last result
Changelog
- 2026-09-07 — initial publish (new format)
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Jordan Reeves
Founder of Talk Through Wealth. A software engineer for over a decade before turning to retirement planning, Jordan built the projection engine after watching family members get fragmented, country-by-country advice that never reconciled. He writes about retirement the way the engine computes it: month-by-month, lifetime-long, and skeptical of any rule of thumb that hasn't been run through the math.