What is the Super Co-Contribution
The Super Co-Contribution is an Australian Government initiative to assist you to save for your retirement whereby if your income is within predetermined thresholds and you make a personal super contribution in a financial year, the Government will match your contribution with a co-contribution up to certain limits.
To be eligible for a co-contribution, the following criteria must be satisfied:
- You make a personal contribution by 30 June of that income year to your SMSF.
- You cannot claim a deduction in your income personal tax return for the contribution.
Your total income must be below the higher income threshold.
- 10% or more of your total income must be from running a business, eligible employment or a combination.
- You are less than 71 years old at the end of the income year, and
- You do not hold an eligible temporary resident visa at any time during the income year.
Additional Eligibility criteria were added from 1 July 2017:
- Your Total Superannuation Balance must be less than $1.6 million on 30 June of the previous Financial Year, and
- You must not have exceeded your Non Concessional Contributions cap in the relevant Financial Year.
You must meet all these requirements to be eligible.
How much does the Government Contribute?
Based on current thresholds, if your total annual income is $38,564 (2020 financial year), the Government will pay $0.50 for every dollar you personally contribute to your SMSF.
Reduction in Co Contribution Payment
For earnings between $38,564 and $53,564 (2020 financial year), the maximum co-contribution is reduced by 3.33 cents for every dollar earned over the minimum threshold until it cuts out. The lower income threshold will be increased to keep pace with wages, with the upper threshold increased accordingly.
Applying for the Government Co-Contribution
No Application is needed for the Government Co Contribution. All you need to do if you are eligible is make a personal superannuation contribution to your SMSF and lodge your personal income tax return. It is that simple and there are no additional forms. ESUPERFUND will determine the amount of the contribution made by you when completing your SMSF annual accounts (noting the contribution will show up in your SMSF Bank Account). The Tax Office will in turn use the information on your income tax return and the information provided by ESUPERFUND on your SMSF tax return to work out whether you are eligible. If you are, they will automatically calculate the co-contribution amount and deposit your entitlement into your SMSF or send you a cheque. The ATO will send you a letter to confirm payment once it has been paid.
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