Contribute extra to super before 30 June and be rewarded with up to $1,500 from the Government
Eligible individuals who make a personal after-tax contribution of $1,000 to super before 30 June will receive a co-contribution of up to $1,500 from the Government.
Could you be one of them?
The Government's popular superannuation co-contribution scheme is an easy way to give eligible individuals a real retirement savings lift.
What do I need to do?
To be eligible for this year's co-contribution, you will need to have made a personal after-tax contribution to your super before 30 June 2008. If you missed out, you can start making regular contributions to your super now for next year's co-contribution. All you have to do is make a personal after-tax contribution before 30 June 2009.
If you meet the eligibility criteria, the money will automatically be paid into your super account at the end of the financial year.
How does it work?
Depending on your income, the scheme can provide up to
$1.50 for every dollar you contribute. A maximum of $1,500 per year for a $1,000 contribution applies.
The scheme works on a sliding scale - the more you earn, the less you get from the Government. (Your income includes assessable income for tax purposes i.e. wages, share dividends etc as well as reportable fringe benefits).
When assessing your eligibility, the Government will look at your total after-tax contributions made during the relevant financial year. This means you can choose to make a one-off contribution or a whole series of smaller contributions during the year.
How much can I get?
For 2007/2008, the maximum co-contribution amount of $1,500 is available to those earning $28,980 or less. However, you can earn total income of up to $58,980 for the 2007/2008 year and still receive some co-contribution.
For 2008/2009, the maximum co-contribution amount of $1,500 is available to those earning $30,342 or less. You can earn total income of up to $60,342 for the 2008/2009 year and still receive some co-contribution.
Are there any other conditions?
There are:
- At least 10 per cent of your income must be earned as an employee (or, if you're self-employed, you must earn at least 10% of your income from carrying on a business)
- You must be under age 71 at the end of the financial year in which you make the contribution (i.e. 30 June 2009)
- You need to make a personal after-tax contribution to your super account before 30 June
- You must be an Australian citizen or permanent resident for that financial year, and
- You will need to lodge your tax return for the relevant financial year.
From 1 July 2007, if you're self employed you may be eligible to receive the co-contribution if you make personal contributions to super (for which you don't claim a tax deduction), and you meet the other criteria above.
Important note: any amounts you contribute and receive as a co-contribution are generally preserved until you reach 65 or satisfy another requirement set by the Government for accessing your super.
Find out more about preservation rules
Will I pay tax on the co-contribution?
The co-contribution is free of contributions tax (treated as an 'non-concessional contribution' for tax purposes) and is returned tax free to you at retirement. However, any earnings on the co-contribution, while invested in your super fund, will be subject to concessional tax rates.
How is the co-contribution paid?
You don't need to apply for the Government super co-contribution; if you make a personal after-tax contribution and you meet the other eligibility criteria, the money will automatically be paid into your super account.
At the end of each tax year all you need to do is lodge your tax return with the Australian Taxation Office (ATO). Your super fund will send the ATO information about your super contributions by 31 October and the ATO will then calculate the co-contribution to be paid to your super account.
Any co-contribution you are entitled to will generally be paid directly into the super fund your personal contributions were made to. The process generally takes 60 days and the ATO will notify you once the co-contribution has been paid to your super fund.
If you would like to have the amount paid into an alternate fund, you should contact the ATO on 13 10 20.
In some circumstances, the co-contribution may be paid to you directly. In the event of your death, your estate may receive this payment. Contact the ATO on 13 10 20 for more information.
Who can I contact for more information?
- Your super fund
Your super fund will be able to provide more information about making personal after-tax contributions.
- ATO 13 10 20
You can contact the Australian Taxation Office (ATO) directly on 13 10 20 or visit their website ato.gov.au/super for further information.
- Speak with your financial adviser
If you are unsure whether contributing to your super is the best strategy for your savings, you should seek professional financial advice.
A financial adviser will take into account your short, medium and long term financial goals and your lifestyle needs before recommending an appropriate strategy for you.
To speak with a Mercer financial adviser, call us on 1800 633 403.
Learn more
| 
