Superannuation could be one of the best ways to invest in ASX shares for passive income due to the lower tax rate.
I believe we should focus on the after-tax return for passive income. Therefore, it's very attractive that superannuation has a lower tax rate than what it would be for a full-time working Australian with their individual tax rate.
Excitingly, for people in retirement, the tax rate in superannuation could be zero.
With that in mind, I believe the two ASX shares below are very effective options for $12,500 in superannuation.
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Dexus Industria REIT (ASX: DXI)
Commercial property could be a compelling opportunity right now, with its high yields and significant discounts to underlying property value. After the Federal budget tax changes with residential property, commercial property could be even more attractive.
But instead of going out to buy and manage a portfolio of properties ourselves, we can invest in a high-quality real estate investment trust (REIT) to do all the work for us and ensure passive income stays truly passive. It's good to enjoy our superannuation and retirement rather than being forced to become a property manager.
This ASX share invests in high-quality industrial warehouses located across major Australian cities, providing sustainable income and long-term capital growth prospects for investors.
Industrial properties have multiple tailwinds, including e-commerce growth and businesses' commitments to strengthen their local supply chain capabilities.
It's seeing strong rental growth, which helps support its distribution. In the FY26 half-year results, it reported like-for-like income growth of 7.4%, driven by rental escalations and strong re-leasing spreads (the new contract has higher rents for the property than the old contract).
It expects to pay a distribution per security of 16.6 cents in FY26, which translates into a distribution yield of 6.9%. Its net tangible assets (NTA) were $3.39 per security at 31 December 2025, implying a discount of close to 30%, which I believe is a very appealing valuation.
As an acknowledgement of how undervalued it is, the business is carrying out a share buyback, improving the underlying value of the remaining shares.
L1 Long Short Fund Ltd (ASX: LSF)
The other ASX share I want to highlight for superannuation investors is this listed investment company (LIC), managed by L1 Group Ltd (ASX: L1G).
LICs are very effective for passive income because they can pay reliable (and growing) dividends from profit reserves built from investment returns generated in prior financial years (and the current one).
L1 Long Short Fund invests in both ASX shares and global shares, with long-term investing strategies and short-selling (betting that share prices will fall). With that diverse investment universe, the fund can make positive returns in all economic conditions.
It hasn't used tech shares to generate the great returns it has delivered – the five sectors that have delivered the biggest returns since 2014 are (in order) mining, industrials, communication services, utilities and financials.
Over the last five years, the LIC's portfolio has delivered a net return of 17% per year, allowing it to fund a sizeable and growing dividend. Past performance is not a guarantee of future returns, of course.
I expect the next four quarterly dividends to be announced, amounting to a grossed-up dividend yield of 5.1% including franking credits at the time of writing, with ongoing strong dividend growth.
