Government contributions include the:
- super co-contribution
- low income super contribution (LISC) for the 2012–13 to the 2016–17 financial years
- the low income superannuation tax offset (LISTO) – from 1 July 2017
These measures are designed to boost the retirement savings of low or middle-income earners.
Subject to eligibility requirements and income thresholds, your fund members may receive a matched super co-contribution from the government of up to $500 annually where they make personal (after-tax) super contributions to their fund or RSA.
Low income super contribution
The LISC provides a government super contribution of up to $500 annually for members with an adjusted taxable income up to $37,000. The LISC payment is15% of the concessional contributions made to the member's superannuation account from 2012–13 to the 2016–17 financial years.
Low income super tax offset
From 1 July 2017, the Australian Government will introduce the LISTO. Those members with an adjusted taxable income up to $37,000 may receive a refund into their superannuation account of the tax paid on their concessional superannuation contributions, up to a cap of $500.
This will provide continued support for the accumulation of superannuation for low income earners and ensure they do not pay more tax on their superannuation contributions than on their take-home pay These amounts are paid directly to you for allocation to members' accounts. These contributions are not subject to tax.
Repeal of LISC
The low income superannuation contribution (LISC) payment was linked to the Mining Resource Rent Tax (MRRT) however the MRRT has been repealed by the Minerals Resource Rent Tax Repeal and Other Measures Act 2014, which received Royal Assent on 5 September 2014.
This means that while LISC will continue to be payable in respect of concessional contributions made up to and including the 2016-17 year, determinations of LISC will cease at 1 July 2019.
What is the process for receiving the LISTO?
The process to determine eligibility and calculate the amount of the LISTO largely mirrors the co-contributions process. We need the following to occur to calculate the entitlement:
- you receive concessional contributions for your members during the year
- you report the concessional contributions to us on the MCS
- where your members have lodged their tax returns, we use the information on the income tax return to determine eligibility and calculate the LISTO
- where a member isn't required to lodge a tax return, we will work out their entitlement 12 months after the end of the relevant financial year using other information we collect.
We expect the majority of LISTO payments to be made in the November toJanuary period following the end of the previous financial year, although they will be paid during a different week of the month from the co-contributions payments. We'll pay you LISTO amounts every third Friday of the month.
Once the entitlement has been calculated, we send the payment to you (either by cheque or electronically) together with a RARN. The notice includes the information you need to allocate the money to your members' accounts.
What if you can't accept the contributions?
There may be instances where you cannot accept the co-contribution, LISC or LISTO– for example, where the individual is no longer a member of your fund, or the account has entered the pension phase. Where you cannot credit the account within 28 days, you must complete a payment variation advice (PVA) providing details of the relevant member accounts and the reasons why the payments cannot be accepted, and return the payment. Interest is payable when the payment is returned outside the 35 days from the date you receive the RARN.
What if you receive an amount greater than $500?
The maximum LISC or LISTO is $500 for the financial year. You may receive remittances for more than $500 if the payment covers more than one financial year – so don't reject any payments we send you just because the amount is more than $500.
Will LISTO be included in the existing processing system?
The LISTO process will be aligned to other current payment and variation processes..
What about ATO-held money?
Where the amounts are returned to us, we will attempt to send them to another super account for that individual. If we can't find a destination, we will send the member a letter asking them to nominate a fund.
If we receive an MCS with new valid destination account details for an individual, we will send the money to that account. If we can't identify a valid account, we will retain them as ATO-held money for the individual until a destination account can be found.
Any LISTO amounts we hold will be displayed on our online services for an individual to find and nominate a new fund to receive the payment.
You need to be aware that you will not be informed of any LISTO amounts we hold when you undertake a SuperMatch search. However, LISTO amounts will be reported for SuperMatch2 searches.
Do you need to report to your members?
Yes. You are required to report government super payments to your members.
You may report the three different items separately or as one item ‘government co-contribution’ to your members on member statements.