A super tax adjustment is needed to stop women taking further hits to their retirement savings

Industry Super Australia

Industry bodies Industry Super Australia and Women in Super say the stage two tax cuts should be matched by a change to the Low-Income Superannuation Tax Offset (LISTO) in a move that would add tens of thousands of dollars to the retirement savings of more than 700,000 women.

The LISTO was aligned with the tax-free threshold and 19% tax bracket and matches superannuation guarantee contributions – but the tax cuts have moved those brackets up the scale.

But the LISTO rate has stalled at $37,000 taxable income and the maximum tax refunded is $500 a year, seeing hundreds of thousands of women left behind.

More than 1.2 million Australians would see a boost in their super savings by increasing the LISTO to cover workers earning up to $45,000.

The changes would benefit 705,000 women who would take home 60% of the extra payments – making women the biggest winner from the measure. Each worker would get about $400 an extra on average.

The Budget tax reform moved the 19% tax bracket to $45,000 and has lowered the tax concession to 3.5 cents in the dollar, dramatically reducing the incentives to contribute to super for hundreds of thousands of Australians, most of whom are women.

Industry Super Australia and Women in Super say the LISTO cap needs to be immediately increased to $640 to maintain the integrity of the measure. The LISTO should also increase in line with the legislated lifts to the Super Guarantee.

More than 200,000 women under 30 would get the super boost, providing vital early career contributions that make the biggest difference to the final nest egg. The changes could lead to a 30-year-old woman earning $40,000 being up to $56,170 better off at retirement.

Women would get $291 million of the super tax refunds and the proposal would provide $488 million in super tax breaks to those earning less than $45,000. It would be a much-needed super boost after women withdraw about $14 billion from super under the government’s early release scheme and ISA analysis shows a quarter of female applicants effectively drained their balance.

Data suggests that many women become eligible for the tax break about the time they leave the workforce or reduce hours to raise children. And about a third of all new recipients of the proposed LISTO increase would be women in their 20s and 30s.

This is also the stage in life when the gender super gap widens – the average super balance gap of women doubles from 15 per cent less than men at 30 to 30 per cent less once a woman reaches her 40s.

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