Tax Planning
Tax Planning Strategies: Maximizing Superannuation Benefits in Light of 2025 Reforms
With LISTO and BTSC changes on the horizon, here are strategies to optimise your super contributions and minimise future tax costs.
By NomadicTax Research Team • 5-8 min read • November 22, 2025
## Introduction
Australia’s forthcoming changes to superannuation tax offsets are significant. As of **1 July 2027**, the **Low Income Superannuation Tax Offset (LISTO)** will increase markedly, and the targeting of large superannuation balances under **Better Targeted Superannuation Concessions (BTSC)** will reshape how earnings are taxed. Strategic planning ahead of time can yield significant savings. ([treasury.gov.au](https://treasury.gov.au/policy-topics/superannuation/reforms-support-low-income-workers-build-stronger-super-system?utm_source=openai))
## Overview of LISTO & BTSC reforms
- **LISTO changes from 1 July 2027**: income threshold rises from **A$37,000 to A$45,000**, and the maximum LISTO payment increases from **A$500 to $810**. ([treasury.gov.au](https://treasury.gov.au/policy-topics/superannuation/reforms-support-low-income-workers-build-stronger-super-system?utm_source=openai))
- **BTSC adjustments**:
- New **second threshold** for targeting high balances above **A$10 million**. ([treasury.gov.au](https://treasury.gov.au/policy-topics/superannuation/reforms-support-low-income-workers-build-stronger-super-system?utm_source=openai))
- Indexing existing large-balance thresholds of **A$3 million and A$10 million** so they adjust with inflation. ([treasury.gov.au](https://treasury.gov.au/policy-topics/superannuation/reforms-support-low-income-workers-build-stronger-super-system?utm_source=openai))
- The earnings calculation for high balances will move to a **realised earnings approach**, aligning more closely with income tax concepts. Changes take effect from **1 July 2026**. ([treasury.gov.au](https://treasury.gov.au/policy-topics/superannuation/reforms-support-low-income-workers-build-stronger-super-system?utm_source=openai))
## Actionable planning steps now
1. **Review your current super balance**: If you have a balance approaching or above **A$3 million**, plan how future contributions or earnings will push you into higher tax brackets or trigger the BTSC thresholds.
2. **Maximise contributions before thresholds rise**: Concessional and non-concessional contributions made before 1 July 2026 will be taxed under existing arrangements. Consider topping up while limits and rates are more favorable.
3. **Time income-earnings strategies**: For those who expect large investment returns in super funds, delaying the realization of gains until after the shift to realised earnings treatments (post-1 July 2026) might alter tax liabilities. But consult carefully—losing deferral may have cash flow or investment timing trade-offs.
4. **Use LISTO effectively**:
- If your taxable income is under **A$45,000** in upcoming years, qualify for larger super offset after July 2027. Plan your taxable income mix (salary vs dividends/distributions) to stay under bumps.
- Ensure your super contributions are correctly declared and tracked to receive offset properly.
5. **Structure income and entity type in light of reforms**: For high net-worth individuals, trusts or company structures may help shift taxation of super earnings, but beware anti-avoidance rules under BTSC and Änderungen to concessional rate caps. Ensure alignment with both income tax and super legislation.
## Example strategies
- **Jordan**, age 55, has super balance of A$2.5 million. Jordan anticipates a capital gain from investments in super. By realizing gains *before* 1 July 2026 (while thresholds are fixed), they may avoid higher BTSC rates on unrealised earnings.
- **Priya**, earning A$40,000 per year. Under current rules, she receives a smaller LISTO; but after reform, because income threshold raises to A$45,000 and LISTO max increases, her super contributions will earn a higher offset. She may consider increasing salary sacrifice contributions now to capture higher offset later.
## Risks and caveats
- Delaying contributions: if you delay too long, you may overshoot thresholds for BTSC or lose opportunity to compound returns.
- Policy or legislation changes: although these reforms are announced, some elements (BTSC implementation, consultations) are not final. ([treasury.gov.au](https://treasury.gov.au/policy-topics/superannuation/reforms-support-low-income-workers-build-stronger-super-system?utm_source=openai))
- Market and investment performance: earnings in super funds are affected by market risk; planning based on projected returns may vary.
## Conclusion
With Australia’s superannuation environment changing significantly over the next two years, proactive planning is essential. Ensuring you understand LISTO boosts, BTSC tightening, and aligning your entity structure, income strategy, and contribution timing will help you retain more of your retirement-fund wealth. Seek advice from a financial planner or tax expert to tailor these strategies to your personal circumstances.