Provided by Mercer: 29/4/10
Make sure you receive the co-contribution you’re eligible for in 2010.
If you’re eligible to receive a Government super co-contribution payment and you haven’t made after-tax contributions for the 2009/2010 financial year, there’s still time to boost your super before 30 June 2010!
If you’re eligible to receive a Government super co-contribution payment and you haven’t made after-tax contributions for the 2009/2010 financial year, then there is still time.
The Government super co-contribution is an incentive designed to encourage people to save for retirement. If your total income is below $61,920 in the 2009/2010 financial year, you may be eligible to receive up to $1 from the Government for every $1 of personal after-tax contributions you make to your super up to a maximum of $1,000.
Generally, ‘total income’ includes your assessable income plus reportable fringe benefits and salary sacrifice contributions to super. The maximum co-contribution is phased out at 3.333 cents for every dollar above $31,920, eventually cutting out at $61,920.
The following table shows how the co-contribution applies for different after-tax contributions at different income levels:
| Your 'Total income' for the financial year | The Government's co-contribution if you make an after-tax contribution of |
|---|
| $1,000 | $500 | $200 |
|---|
| $31,920 or less | $1,000 | $500 | $200 |
| $33,920 | $933 | $500 | $200 |
| $37,920 | $800 | $500 | $200 |
| $41,920 | $666 | $500 | $200 |
| $45,920 | $533 | $500 | $200 |
| $49,920 | $400 | $400 | $200 |
| $53,920 | $266 | $266 | $200 |
| $57,920 | $133 | $133 | $133 |
| $61,920 | $0 | $0 | $0 |
 | | | | |
Source: Mercer
Even if your total income is close to the maximum, you may still consider making an after-tax contribution to super not only because of the co-contribution, but also because there may be the potential benefit of compound earnings.
If you’re eligible (there are a number of conditions) and you make a personal after-tax contribution to your super before 30 June 2010, some time after your tax return has been finalised the Australian Tax office will forward your co-contribution to your super fund.
However, you should also remember that the contribution caps for after tax contributions for the year 30 June 2010 are $150,000, or $450,000 averaged over 3 years for people aged under 65. Contributions in excess of this will be taxed at 46.6%.
Of course, everyone’s financial circumstances are different you may benefit from seeking professional financial advice about your super and the Government super co-contribution from a licensed or appropriately authorised financial adviser. Getting help with navigating the options available could help you build a retirement nest egg to suit your needs.
More information
This information has been prepared by Mercer (Australia) Pty Ltd ABN 32 005 315 917 for general information only. The information does not take into account your personal objectives, financial situation or needs. Therefore, you should not act on this information if you have not considered the appropriateness of this information to your personal objectives, financial situation and needs. You should consult a licensed or appropriately authorised financial adviser before making any investment decision.
