Address:
3/374 Pennant Hills Road, Pennant Hills NSW 2120
Call Us Today:
(02) 9980 5892

Am I Eligible For The Low Income Super Tax Offset?

Investing through superannuation is often done due to the lower tax rates on super than what most people actually have to pay. A super fund only pays 15% tax on what the fund receives. When contributions are made to the super fund, it will only pay 15% tax on those contributions.

If you’re in a lower-income bracket, you’re likely to pay the same or less tax than a super fund would in total – so why would you want to invest your hard-earned income into superannuation? Especially when there is a belief among some that superannuation has been designed to benefit those earning higher incomes rather than those in the lower-income brackets.

That’s why the government has benefits available to low-income earners that do invest through superannuation, making it an attractive option for even low-income earners. 

One of these benefits is the Low Income Super Tax Offset (or, LISTO), introduced on 1 July 2017. It is a rebate that is available for those who earn up to $37,000, which refunds the 15% contributions tax that would otherwise have been paid on those contributions that you make to super. What this means is that you would pay no more tax in your super than you would pay outside of super.

This benefit is automatically paid out to your super fund from the Australian Taxation Office once you and your fund have both lodged your tax returns. All of the processing and paperwork is completed by the ATO and your super fund. 

The maximum amount that can be received is $500, which approximately equals the tax that would be paid on the 10% employer super contributions that are made on your behalf (if you were earning $37,000). 

The LISTO aims to provide continued support for low-income earners and ensure that generally, they do not pay more tax on their super contributions than on their take-home pay.

If you’re someone who often finds it difficult to make large lump sum payments for goods or services, you may want to consider looking into “Buy Now Pay Later” services.

Buy now pay later essentially means that, rather than paying in a full lump sum payment for a product or services rendered, there may be an option to pay through instalments of a certain amount over a set period to make the sum of the full amount in total. This method should allow you to pay in full for the product or service without overly straining your finances – you pay back what you can, as agreed upon when you begin the buy now pay later service.

Some popular buy now pay later services include Afterpay, Zip Pay, Brightepay, and some credit card networks such as  Mastercard and Visa, can offer buy now pay later arrangements.

Though it can be a convenient, immediate solution, it may be challenging to juggle the necessary repayments with other financial commitments. It’s not always the most appropriate method for people, and you should bear in mind your situation and ability in paying back the amounts. 

Before you sign up, keep in mind: 

  • It becomes easier to overspend with buy now pay later services, so know your limits on what you can and can’t afford.
  • You will be charged fees and costs to use the service, which can add up to a princely sum in and of itself.
  • Keeping track of your payments can be tricky if you’ve signed up for multiple services.
  • It could affect your loan applications for a car or mortgage as lenders consider buy now pay later spending just as much as your credit score.
  • Late repayments can appear on your credit report, which affects your ability to borrow money in the future.
  • Layby can be a cheaper alternative to buy now pay later, with no account-keeping or late fees to consider

If you are someone who could make use of BNPL services, you may wish to:

  • Ensure that when using the BNPL service, you stick to a set limit on what you spend so that you can comfortably pay it back later. 
  • Aim only to have one BNPL account at a time to manage payments through, rather than confuse yourself with multiple payments across different providers.
  • Always budget for bills, loan payments and BNPL payments, and 
  • Rather than use your credit card for payments to your BNPL account, consider linking to your debit account instead.

If you would like assistance in planning your financial future, help in managing your budget or some friendly advice, see us for a chat about what we can do for you.

Testimonial

What our Client Say

John Briggs

Jane Noller has been my accountant for the last 15 plus years. I can testify to Jane’s professionalism and expeditious manner in dealing with the day to day issues that surrounds our business accounting.

John Briggs

Registered Building Certifier

David and Alison Parker

I have been consulting J L Noller and Co. (more specifically Jane) for six years and during this time I have found her to be professional, efficient and easy to discuss all accounting and taxation matters with. Her office team are all polite and friendly also.

David and Alison Parker

Business Owner

Carl Gillmore

I have used Jane & the team for the last 6 years for all of my business & personal accounting needs. They have always been professional, easy to talk to & available when we have needed assistance.

Carl Gillmore

Carl Gillmore Landscape

John Briggs

Jane Noller has been my accountant for the last 15 plus years. I can testify to Jane’s professionalism and expeditious manner in dealing with the day to day issues that surrounds our business accounting.

John Briggs

Registered Building Certifier