The super co-contribution is intended to help eligible people boost their retirement savings.
If you are a low or middle-income earner and make personal (after-tax) super contributions to your super fund, the government also makes a contribution (called a co-contribution) up to a maximum amount ($500 in 2013-14).
The amount of government co-contribution you can receive depends on how much you contribute and what your income is.
The way your co-contribution is calculated depends on the financial year in which you made your personal super contributions.
Eligibility for the super co-contribution
You will be eligible for the super co-contribution if you can answer yes to all of the following:
- you made one or more eligible personal super contributions to your super account during the financial year
- you pass the two income tests:
1. your total income for the financial year is less than the higher income threshold ($49,488 for 2014-15) and ($50,454 for 2015-16)
2. 10% or more of your total income comes from eligible employment-related activities or carrying on a business, or a combination of both
- you were less than 71 years old at the end of the financial year
- you did not hold a temporary visa at any time during the financial year (unless you are a New Zealand citizen or it was a prescribed visa)
- you lodged your tax return for the relevant financial year.
10% eligible income test
To satisfy this test, 10% or more of your total income must come from employment-related activities, carrying on a business, or a combination of both. Amounts from these sources are referred to as eligible income amounts.
For this test, your total income is not reduced by your allowable business deductions. This is to ensure self-employed individuals are not disadvantaged if they have low income or low profit margins in a financial year.
Examples of eligible income
Working out the exact amount of your total income and eligible income may be complex, depending on your circumstances. You may need to seek professional advice to assist you.
Generally, income that is related to employment or business is eligible income. For example:
- salary and wages
- business income earned as a sole trader or in a partnership
- director fees.
The following types of income are not eligible income for super co-contribution purposes:
- non-business partnership distributions
- distributions from a trust
- income from individually or jointly held assets, such as interest, rent and dividends
- income related to another year of employment, such as employment termination payments (ETPs) and lump sum payments.
Making personal super contributions
Personal super contributions are the amounts you contribute to your super fund from your after-tax income (that is, from your take-home pay). These contributions:
- are in addition to any compulsory super contributions your employer makes on your behalf
- do not include super contributions made through a salary-sacrifice arrangement.
To be eligible for the super co-contribution, your personal contributions need to be paid to a complying super fund. However, personal contribution amounts claimed (and allowed) as an income tax deduction will not be eligible for the co-contribution.
You do not need to make your personal contributions as a single lump sum – you can make payments throughout the financial year. We use the total amount you have contributed for the year to calculate the co-contribution.
Your super fund can tell you how to make personal contributions. Most funds offer you a number of options, including BPAY, direct debit and through your bank account.
In some cases, you can make regular super contributions into your super account directly from your after-tax pay. (If the contributions come from your before-tax pay, they are generally referred to as salary-sacrificed contributions and will not qualify for the super co-contribution.)
Receiving the super co-contribution
If you are entitled to a co-contribution, you are not required to do anything to claim it. We will pay it to your super fund.
If your co-contribution is less than $20, we will pay the minimum amount of $20.
Co-contributions can be paid directly to you if:
- you have retired (either by reaching preservation age or due to permanent incapacity or invalidity) and no longer have an eligible super account
- you are the legal representative of the account holder, who is deceased.
The preservation rules that apply to your current super entitlements also apply to the co-contribution.
If you are eligible to receive a direct payment, you can:
- use myGovExternal Link to lodge the request online
- complete an Application for direct payment of government super co-contribution (NAT 10759).
Super co-contribution and tax
The super co-contribution is:
- not subject to tax when it is paid to your super fund
- not included as income in your tax return
- preserved in a super fund and can only be accessed when other preserved amounts can be accessed – that is, when a condition of release has been met.
Earnings on the super co-contribution will be taxed like any other earnings of the super fund.
Calculating your super co-contribution
The minimum co-contribution payment is $20. Payment amounts are rounded up to the nearest multiple of 5 cents.
The way your co-contribution is calculated depends on which financial year you made your personal super contributions.
Refer to ATO website to calculator your Super Co-Contribution
In 2013–14, Angelo will earn $33,000. He pays $40 per fortnight from his take-home pay into his super account (this will total $1,040 for the financial year). He meets all other co-contribution eligibility requirements.
With this payment plan, Angelo will be eligible for the maximum co-contribution for 2013-14 ($500).
We will pay this amount into Angelo's super account between November 2014 and January 2015.
End of example
Super co-contribution payment not received
If you think you are entitled to receive a co-contribution payment but it has not been made, check that you have met all of the eligibility criteria.
What do you have to do?
1. Assuming you earn less than $50,454 (‘total income’) for the 2015/16 year ($49,488 for the 2014/15 year), you then make a non-concessional (after-tax) contribution to your superannuation fund.
2. You lodge your tax return.
3. Within 60 days, the Government pays the co-contribution into your superannuation fund.
NOTE: Your superannuation fund cannot accept after-tax contributions, or receive co-contributions on your behalf, if you have not provided your tax file number (TFN) to your fund.