Super co-contributions are an initiative by the government to encourage low or middle-income earners to put money into their retirement savings. Basically it works like this: if you earn below a certain amount and you make a personal contribution to your super fund, the government will also make a co-contribution to your super fund. Yes, free money.
Now for the finer details.
There are two income thresholds for the co-contribution:
Lower Threshold ($42,016 before-tax for 2022-23)
If your income is at the lower threshold or below, personal contributions (your take-home pay or after-tax) of up to $1,000 will receive the maximum co-contribution of $500.
Higher Threshold ($57,016 for 2022-23)
Income amounts at the higher threshold and above will not be eligible for a co-contribution. Income amounts between the lower and higher threshold will receive a reduced co-contribution relative to your income amount.
Some other conditions for eligibility include:
- You must be under the age of 71 years old at the end of the financial year;
- You must not hold a temporary visa at any time during the financial year;
- You have a total super balance less than the transfer balance cap at the end of 30 June the previous financial year (transfer balance cap currently at $1.7 million);
- You have not contributed more than your non-concessional contributions cap;
- You have not claimed any personal super contributions as a tax deduction;
- You have lodged a tax return for the relevant financial year
Your super contribution can be in the form of a regular payment or irregular lump sum/s. The ATO will take the total amount you have contributed for the year to calculate the co-contribution.
Use the ATO’s Super Co-Contribution calculator to work out how much you would receive.
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Disclaimer: This post has been prepared for general information purposes only. It is not specific advice to any particular person. You should consult an authorised Align Financial adviser before making financial decisions. Align Financial | Financial Planner Northern Beaches | Servicing North Narrabeen, Narrabeen, Mona Vale, Elanora Heights, Newport, Avalon, Palm Beach | Enquire with us online
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