Low income superannuation contribution, known as LISC.
Beginning this financial year (2012-2013) is a new scheme in which the government will provide a new super contribution tax payment up to $500 for eligible income earners.
Contributions made into your super get taxed at 15% (this is a contribution tax). Even though someone may not get an income tax deducted from their pay they still can get penalised from the superannuation tax system in Australia by having their super contributions hit with concessional tax.
What is the Low income earner government contribution?
For Australians earning less than $37,000 (adjusted taxable income) and whose employers make concessional superannuation contributions for you, you will receive a refund of contributions tax which has been deducted from your super balance.
What do I get back?
If you are eligible for the scheme you can receive up to $500 annually from the government into your super balance. Still keep in mind that you will have to continue paying 15% tax on any investment earnings when your super contributions are invested by your super fund.
- Concessional contributions were made to a complying super fund in that financial year
- Your adjusted taxable income does not exceed $37,000
- Not a holder of a temporary resident visa
- 10% or more of your income is from business or employment
- The LISC payment amount is $20 or more
Why are they doing this?
With an ageing population the government is trying to improve measures to boost the populations’ superannuation balances, to relieve strain on welfare benefits later on.
When will I receive it?
If you are eligible it is proposed that contributions made from 2012-20013 will be paid back in the 2013-2014 year (it can take up to 14 months). You do not need to lodge an application-it will be worked out directly by the ATO upon lodgement of a tax return. You do need to make sure that your superannuation fund has your tax file number as the payment cannot be made if this is missing.
Example of low income superannuation contributions at work
If my annual income is $36,000 per year and my employer has paid $3,240 into my super fund (compulsory 9%). I lodge my tax return and have $1000 worth of deductions making my adjusted taxable income ($35,000). I will receive an LISC payment of $486 (which is 15% of the $3,240-the amount which I would have paid in concessional tax).
Remember that the low income superannuation contribution scheme can often be changed, so be sure to check out the ATO website for more details.