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ISA calls for super tax reform

Industry Super Australia (ISA) has called for the stage two tax cuts to be matched by a change to the Low-Income Superannuation Tax Offset (LISTO) to help boost the retirement savings of women.

ISA said this move could help 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," ISA said.

"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."

ISA claims 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.

It said the changes would benefit 705,000 women who would take home 60% of the extra payments.  ISA said this would make women the biggest winner from the measure.

Industry Super Australia and Women in Super said the LISTO cap needs to be immediately increased to $640 to maintain the integrity of the measure.

"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," ISA said.

"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."

Industry Super Australia chief executive Bernie Dean said the measure could help women who, on average, are still retiring with almost half the amount of super than men.

"This proposal will put more money into women's super-balances early in life - going someway to bridge the gender pay gap that unfortunately persists in retirement," Dean said.

Women in Super chair Catherine Wood said: "The LISTO is important to ensure lower income earners receive some tax relief for saving for retirement. It can never match the $10,000 plus annual tax break received by high income earners, and the government should at least maintain the integrity of the provision which impacts over half the female workforce."

"Young women on lower incomes have had to access their superannuation to get them through the pandemic. The least the government can do is to keep the LISTO relevant."

Read more: ISAIndustry Super AustraliaLow-Income Superannuation Tax OffsetBernie DeanCatherine Wood
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