Budget 2025: Payday super on track; now let’s boost low-income super
25 March 2025
The Government tonight confirmed crucial payday super reforms are on track to start from 1 July 2026, with Budget papers reaffirming the timetable and a MYEFO investment of $404 million to meet it.
It also unveiled a surprise $9.7 billion super revenue windfall in extra tax due to stronger projected investment returns by super funds. The Super Members Council advocates this tax windfall should swiftly fund a $500 million-a-year super boost to strengthen retirement for 1.2 million low-income Australian workers.
But while tonight’s Budget included several cost-of-living measures, lower-income Australian workers continue to miss out on the tax-breaks that would help lift living standards in retirement.
The Low-Income Super Tax Offset (LISTO) has been frozen since it was introduced 13 years ago, effectively cutting the super tax benefit for some of the nation’s lowest-income workers.
Almost two-thirds of LISTO recipients are women – making a push to lift the LISTO a targeted measure to help close the super gender gap.
Super Members Council CEO Misha Schubert said delivering the historic payday super reforms on time will be a game changer to ensure $5 billion a year in unpaid super is paid and the law is upheld.
“Fixing the scourge of unpaid super is urgent – the 2.8 million Australians who miss out on some or all of their super contributions each year cannot afford to wait a day longer for these reforms,” she said.
“And for 9 million Australians, having super paid on paydays – not four times a year – will mean they start earning compound investment returns sooner, delivering an extra $7,700 on average by retirement.”
“Strong bipartisan support for this reform will be crucial to its success and we urge the Opposition to also commit support for the legislation. We’ll continue to work closely with the Parliament, business leaders and other stakeholders to ensure these reforms are successfully implemented by 2026.”
This Budget unveils an extra $50 million investment to continue a current Australian Taxation Office tax compliance taskforce covering both wages and super. It is expected to help return an extra $31 million in unpaid super to workers.
SMC renews its urgent call for the Low-Income Super Tax Offset to be boosted, to ensure lower-paid Australians get a fairer tax break on their super.
SMC analysis shows the lowest paid Australians have missed out on a combined $2.5 billion since 2020 because LISTO has not kept pace with changing tax brackets and Super Guarantee rate.
By raising this payment from $500 to $810, and by paying the tax offset for workers earning up to $45,000 a year (the current income cut-off is $37,000), this Budget could have started to strengthen retirement for more of the nation’s lowest-paid workers.
“Lifting the LISTO would make a big difference to the retirements of lower-income Australians – boosting the super balances of some of the nation’s lowest-paid women by 21%,” Ms Schubert said.
“Giving1.2 million low-income Australians a fairer deal on super tax will strongly boost their incomes in retirement – delivering more financial security after a lifetime of hard work.”
“For a worker who stays in the second tax bracket throughout their career, this tax cut could add an extra $60,000 to their retirement.”
Another super priority not addressed in tonight's Budget is removing an outdated law denying most teen workers up to $10,000 from their retirement savings.
Under-18s currently are not guaranteed super contributions unless they work more than 30 hours a week, due to a discriminatory rule, which is also challenging for businesses to administer.
Ms Schubert urged the Government to prioritise abolishing the 30-hour threshold and guarantee all young Australian workers get a super start to work.
“Australians strongly support universal super – and know it’s a workplace right. Super should be for everyone, paid from the first hour of your first job. Fixing this outdated exclusion is long overdue.”
“As every smart investor knows, it’s the dollars you invest earliest that work hardest to grow your compound returns. Every Australian worker, at every age, deserves the right to set themselves on the path to a dignified retirement,” she said.
“Super is Australia’s economic stabiliser – the investment of the savings of millions of everyday Australians powers Australian business and creates new jobs. Securing the system’s fundamentals and making super even stronger and fairer is key to Australian prosperity.”
Ends
The opinions above are those of the author in their capacity as spokesperson for Super Members Council of Australia (SMC). SMC, the authors and all other persons involved in the preparation of this information are thereby not giving legal, financial or professional advice for individual persons or organisations.
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We are a strong voice advocating for more than 11 million Australians who have over $1.5 trillion in retirement savings managed by profit-to-member superannuation funds. Our purpose is to protect and advance their interests throughout their lives, advocating on their behalf to ensure superannuation policy is stable, effective, and equitable. We produce rigorous research and analysis and work with Parliamentarians and policy makers across the full breadth of Parliament.
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