Super co-contribution is intended for low-income earners whose income is less than the upper-income threshold.
The federal government is giving away money for any contribution in after-tax that is made to your super fund.
The amount that the government pays you varies year to year, for year 2015/2016 you will receive 0.5 for every dollar you contribute up to $500 and if your income is at the $35,454.
If you earn more than the low-end threshold the amount is reduced by 3.33 cents for every dollar you earn above the threshold.
Co-contributions cut out once your total income exceeds upper threshold income. There are many online co-contribution super calculators that you can use to calculate to know how much you receive based on your income and contributions.
The way it works is that your super fund needs to be associated with your TFN. During your tax returns, you need to disclose the taxable income and super contributions. At the end of the financial year, ATO calculates and deposits the co-contribute amount into your super fund. Like all other super money, you can only access this amount on your retirement.
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Super co-contribution eligibility test
The following conditions must be satisfied for a federal government co-contribution test.
• You need to be a permanent resident or Australian citizen to be eligible for this.
• Your age should be less than 71 years at the end of the financial year in which the eligible contribution is made.
• Your earning should be less than the upper-income threshold.
• You need to lodge your income tax returns for that financial year.
• You need to make an after-tax non-concessional contribution to your super.
• You need to satisfy the 10 per cent income test rule that means you must earn at least 10 per cent of your income from eligible employment-related activities like wages or carrying business or combination of both.
• Your superannuation fund needs to be associated with your TFN.
If you are self-employed then you may not be eligible for federal government super co-contribution.