On 13 October 2025, the Australian Government announced a package of reforms aimed at supporting lower-income workers and strengthening the overall superannuation system. The reforms focus on improving equity, refining tax concessions, and ensuring sustainability.

Boost to the Low Income Superannuation Tax Offset (LISTO)

From 1 July 2027, the Low Income Superannuation Tax Offset (LISTO) will be expanded. The income eligibility threshold will rise from $37,000 to $45,000, and the maximum LISTO payment will increase from $500 to $810. These adjustments are designed to extend the benefit to more workers—particularly those earning between $28,000 and $45,000—ensuring their super contributions are not disadvantaged by the 15 per cent tax on super earnings.

Adjustments to Large Balance Concessions

The government also outlined changes to how tax concessions apply to very large superannuation balances. A second threshold will be introduced at $10 million, in addition to the existing $3 million level, to better target tax concessions on super earnings. Under the proposal, higher tax rates will apply only to realised earnings, aligning with broader income tax principles.

Both the $3 million and $10 million thresholds will be indexed over time to maintain alignment with other superannuation caps. The start date for these measures has been delayed to 1 July 2026 to allow time for further consultation and implementation planning. It is estimated that fewer than 0.5 per cent of Australians with the largest super balances will be affected.

Other Related Measures

From 1 July 2026, employers will be required to pay superannuation contributions at the same time as salary and wage payments, under the new “Payday Super” rules. In addition, the legislated objective of superannuation will formally recognise that the system is designed to preserve savings to deliver income for a dignified retirement in an equitable and sustainable way.

The government also plans to introduce mandatory service standards for large super funds, focusing on claims handling, communication, and benefit payments.

Budget and Implementation

The expanded LISTO is estimated to cost approximately $435 million over the forward estimates, contributing to an overall net cost of $4.2 billion for the reform package. The government will continue consulting with industry and stakeholders to finalise the legislative details and ensure a smooth transition.