What is the Government Superannuation Co-Contribution initiative?
This is an initiative to help you save more for your retirement.
The co-contribution is a payment the Government makes to your superannuation if you are in the low to middle income thresholds, make voluntary after-tax contributions to your super, and satisfy other eligibility criteria. Generally, income thresholds are indexed each year and the matching rate is up to $0.50 for every $1 you contribute (up to a maximum of $500). This is an incentive for you to contribute to your super.
Who is eligible?
You are eligible for the co-contribution if, in a financial year (1 July to 30 June):
You make personal, after-tax superannuation contributions by 30 June to a complying superannuation fund or retirement savings account (RSA)
Your total income is less than $52,697
You receive at least 10% of your total income from eligible employment or carrying on a business, or a combination of both
You are under 71 years of age at the end of the financial year
You don’t hold a temporary resident visa at any time during the financial year except where a temporary visa holder is also a New Zealand citizen or holder of a subclass 405 (Investor Retirement) or subclass 410 (Retirement) visa
You lodge an income tax return for the relevant financial year
Your non-concessional contributions for the financial year do not exceed your non-concessional contributions cap
Your total superannuation balance at 30 June of previous financial year is less than $1.6 million
What is total income?
Total income is defined as assessable income plus reportable fringe benefits and reportable employer superannuation contributions (generally salary sacrifice contributions).
How is the co-contribution calculated?
The contribution amount depends on how much you contributed and your total income for the financial year ending 30 June.
How will the Government pay your superannuation co-contribution?
You don’t need to claim the co-contribution because if you qualify and submit a tax return for the year ending 30 June, the Government will automatically forward the co-contribution amount to your superannuation fund. It might take a few months for the money to be deposited into your account, and in some cases, you may need to inform the Australian Taxation Office of which fund to send it to. You will receive a confirmation letter from the Australian Taxation Office once completed.
If you would like to discuss this with an accountant further for a better understanding of how Government Superannuation Co-Contributions might impact you, call us today.