What is the Government’s Super Co-contribution Scheme?
A major benefit of making after-tax contributions is that you might be eligible for the Government’s superannuation co-contribution scheme. (Salary sacrifice contributions to super are not eligible for a co-contribution.)
The super co-contribution scheme has been an enormous success for low and middle income Australians who are using this opportunity to boost their retirement savings.
In the 2008/2009 financial year, after-tax voluntary super contributions will be matched at $1.50 for every $1 contributed up to a maximum co-contribution of $1,500 for those on incomes up to $30,342.
The amount is reduced by five cents for each dollar of income over $30,342. The maximum co-contribution phases out at an upper threshold of $60,342.
The lower income threshold is indexed on an annual basis and the higher income threshold will be the lower income threshold plus $30,000 (see the table below).
Co-contribution income thresholds
| 2008-09 |
$30,342 |
$60,342 |
| 2007-08 |
$28,980 |
$58,980 |
| 2006-07 |
$28,000 |
$58,000 |
Self-employed members
You can also now access the co-contribution if you make after-tax contributions and meet the eligibility criteria (visit www.ato.gov.au/super for full details).
Is it difficult?
The beauty of the super co-contribution is that it’s so simple. If you’re eligible and have supplied your tax file number to your super fund, all you have to do is make after-tax contributions to HESTA by the end of the financial year and lodge a tax return. You don’t need to fill out anything on your return regarding the co-contribution. HESTA will notify the Australian Tax Office about your after-tax contributions and they will decide if you are eligible for a co-contribution using this notification and information about your income from your tax return. The co-contribution will be paid directly into your super account, usually by the December after the end of the financial year or early in the following year.
The ATO determines whether a co-contribution will be made by the Government and the level of that co-contribution. You can call the ATO about co-contributions on 13 10 20 or visit www.ato.gov.au/super To make an after-tax contribution to your super, download Topping up your super.
If you’d like an idea of how after-tax contributions and the co-contribution may affect your income and your super balance, HESTA’s salary sacrifice/co-contributions calculator and Super Calculator may help.