Super contributions: Government co-contributions scheme

With the Government's super co-contribution scheme, if you are eligible* and your total income is less than $31,920**, then you will receive $1 from the Government for every after-tax dollar you contribute to super up to a maximum of $1,000.

The co-contribution amount decreases by 3.333 cents for every dollar earned over $31,920, until it reaches zero at $61,920**. There is a maximum co-contribution of $1,000.

You may be eligible for the co-contribution if:

• you make an eligible personal super contribution by 30 June each year into a complying super fund or retirement savings account
• your total income* is less than the higher income threshold for that year
• 10% or more of your total income is from eligible employment, running a business or a combination of both
• you are less than 71 years old at the end of the year of income
• you do not hold an eligible temporary resident visa at any time during the year
• you lodge your income tax return for the relevant income year.

* Total income is defined as:

• assessable income, plus
• reportable fringe benefits, plus
• reportable employer super contributions (RESC)
• less allowable business deductions. (Deductible contributions to super and work related employee deductions are not allowable business deductions and cannot reduce ‘total income’.)

RESC are generally salary sacrifice contributions to super or amounts that you could have chosen to receive as salary or wages.  RESC does not include superannuation guarantee contributions.
** These thresholds apply for the Financial years 2009/10, 2010/11, 2011/12 and 2012/13.

Benefits of the super co-contribution scheme

Extra super from the Government each year can go a long way to build your super balance. Because the money is invested in super’s low tax environment, earnings are only taxed at 15% - rather than your normal marginal tax rate. With the power of time and compounding returns, you could have more super than you expect when you retire.

How does the super co-contributions scheme work?

Once you’ve made your personal after-tax contribution, you only need to lodge your personal tax return at the end of the year to claim the Government co-contribution.

If you are eligible, the Australian Tax Office (ATO) will then automatically calculate your co-contribution amount and deposit it into your super account. The payment is usually made between November and January each year.

The ATO will send you a letter containing details of your co-contribution amount in the month after the money has been sent to your super fund. The co-contribution amount should then be included in your next super statement.

Please note: prior to 1 July 2007 self-employed people were not eligible for the Government co-contributions scheme, however they too may now be eligible.