The Super Co-contribution
NOTE: The 2010/11 and 2011/12 Federal Budgets proposed several changes to Australia’s superannuation system. Some of these measures are yet to pass legislation. NICRI will update this factsheet accordingly however it may be necessary to review the proposed changes before making any decisions. For more information, visit the websites www.ato.gov.au and www.budget.gov.au.
The super co-contribution is a Government initiative to encourage individuals to contribute to their super above the super guarantee (SG). For the 2010/11 and 2011/12 financial years, the Government will contribute an additional dollar for every eligible one dollar contribution up to $1 000. The maximum co-contribution an individual can receive during the 2010/11 and 2011/12 financial years is $1 000.
To receive the maximum co-contribution for the 2010/11 and 2011/12 financial years, your assessable income (including exempt income) plus Reportable Fringe Benefits (RFBs) must be $31 920 or below. The size of the co-contribution reduces as your assessable income plus RFBs exceeds this amount. Once your income reaches $61 920, you are no longer eligible for the co-contribution.
Other Eligibility Requirements
To be eligible for the co-contribution the person must, in that financial year:
· Have more than 10% of your assessable income plus RFBs come from eligible employment. If you are self employed see below;
· Make a personal (non concessional) contribution to a complying superannuation fund or Retirement Savings Account (RSA);
· Not hold an ‘eligible temporary resident visa’ at any time during the particular financial year;
· Lodge a tax return for that year; and
· Be aged less than 71 years at the 30th of June in that year.
You must also supply your Tax File Number (TFN) to your super fund or RSA to be able to make a personal contribution and receive the co-contribution. Also, if your super fund does not have your TFN, then your contributions and earnings on your member account could be subject to a 31.5% penalty tax. If you do not have a TFN, you can download an application form from the ATO’s website www.ato.gov.au, or can order one by calling 13 28 61 for personal enquiries or 13 28 65 for the ATO’s automated self help publications ordering service.
The amount of the co-contribution payable is the lesser of:
- Amount of contribution
OR
- $1 000 - {([Income + RFB] - $31 920) x 0.05)}
*Note: If the co-contribution entitlement is greater than $0 and less than $20 a co-contribution of $20 will be made
Self-Employed or Unsupported Contributions
If you are self-employed, the same eligibility rules as above apply except for the 10% employment rule. Instead, to be eligible for the co-contribution, 10% or more of your total income must come from eligible employment, running a business or both.
For the self-employed, your total income is assessable income before deductions plus RFBs and reportable employer super contributions (ie. the SG and salary sacrificing).
How to Make a Contribution
If you make your personal contribution, you can do it via a direct deposit, electronic funds transfer and, in some cases, via BPay. You will need to check with your superannuation fund. Alternatively, your employer may make the contribution on your behalf by way of a deduction from your after tax income.
If you do decide to make a contribution, to be eligible for the co-contribution you must make the contribution by 30 June each year into a complying super fund or RSA.
You do not have to make the contribution as a lump sum. Instead you may choose to make fortnightly or monthly instalments, just as long as the amount is contributed by 30 June.
Please note: personal contributions are made from your after tax income, while salary sacrifice contributions to super come from you before tax income.
Receiving the Super Co-Contribution
Once you make a personal contribution and meet the above requirements, your super fund will report your personal contribution to the Australian Taxation Office (ATO) who will calculate the co-contribution. Co-Contributions are usually paid out between November and January each year.
The super co-contribution itself is not taxed, however any amounts earned on the co-contribution will be subject to the super fund’s tax rate.
Missing Super Co-Contributions
If you do not receive the co-contribution and you believe you are entitled to it, first double check that you met the requirements and then contact the ATO on 13 10 20, or write to the ATO to request a review of the decision at:
Superannuation
Australian Taxation Office
PO Box 3100
PENRITH NSW 2740
Download a copy of this factsheet The Super Co-contribution