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 (2009/10), 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 (2009/10). There is a maximum co-contribution of $1,000 (2009/10).

Total income is defined as:

• assessable income, plus
• reportable fringe benefits, plus
• reportable employer super contributions (RESC)

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 contirbutions.

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.