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The Superannuation Co-contribution Scheme started in 2003/04 to encourage us to make personal contributions to superannuation. It was targeted at low to middle income earners and has been improved progressively since then.
Over 405,000 Australians claimed almost $130 million in Government co-contributions in 2017/18. A lot of people are taking advantage of this opportunity.
How does it work?
If you're a low or middle-income earner and make personal (after-tax) contributions to your super fund, the government may also make a contribution (called a co-contribution) up to a maximum amount of $500.Personal super contributions are the amounts you contribute to your super fund from your after-tax income (that is, from your take-home pay), not to be confused with the pre tax compulsory super contributions from your employer and/or salary sacrifice contributions.
The amount of government co-contribution you receive depends on your income and how much you contribute.
To be eligible for the super co-contribution, your personal contributions need to be paid to a complying super fund.
You don't need to apply for the super co-contribution. When you lodge your tax return, we will work out if you're eligible. If the super fund has your tax file number (TFN) we will pay it to your super account automatically.
In the 2019-20 year, if you earn an income of $38,564 you can qualify for the maximum co-contribution. (Income = assessable income plus reportable fringe benefits.) The co-contribution reduces by 3.333c in the dollar for each dollar of income over $38,564 and cuts out when your income reaches $53,564.
To be eligible to receive the co-contribution you need to have a total superannuation balance of less than $1.6 million and have not exceeded your non-concessional contributions cap for that financial year.
If you are self employed
The co-contribution is also available to self-employed Australians who earn at least 10% of their total income from employment or running a business. (Income = assessable income plus reportable fringe benefits less business income deductions.)
You must make a personal contribution without claiming a tax deduction for it. The Tax Office will work out the co-contribution amount from information on your tax return and details of contributions provided by your super fund.
If you haven’t already taken advantage of this generous option, refer to this page on the ATO website for more info. Alternatively, contact your qualified, licensed financial planner to learn how you might benefit from the super co-contribution scheme – for yourself or your loved ones.
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