Grow your super with the Government's help!
To give Australians a helping hand towards their retirement savings, the Government contributes up to $1,000* towards the super accounts of eligible individuals who make an after-tax contribution to their super before 30 June 2010.
To be eligible for this year's co-contribution amount, you must make an after-tax contribution to your super before 30 June 2010. If you meet the eligibility criteria, the tax office will calculate your co-contribution amount and deposit it into your super account.
How much can I get?
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, reportable fringe benefits and from 1 July 2009 any salary sacrifice contributions to super).
For 2009/2010, the maximum co-contribution amount of $1,000* is available to those earning $31,920 or less who make an after-tax contribution of $1,000. The co-contribution cuts out altogether when you earn $61,920 or more.
*Important note: The maximum co-contribution amount payable has been temporarily reduced to $1,000 from 1 July 2009 to 30 June 2012. The maximum rate will increase to $1,250 from 1 July 2012 to 30 June 2014, and then increase back to $1,500 from 1 July 2014.
Eligibility criteria
- 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 2010)
- 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.
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 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.
Please note the Government places caps on both pre and post-tax contributions to super (including salary sacrifice and employer contributions). Any contributions over the relevant caps are subject to extra tax. Find out more about contribution caps
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.
Make an after-tax contribution to your Mercer Super Trust 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.
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.
Possible delays with payment of 2008/09 co-contribution
The Tax Office has advised trustees of super plans that around 200,000 out of a total of over 1 million of super co-contribution payments may not be made by the Tax Office by the end of the 2008/09 financial year, due to problems with their systems.
Mercer has been advised that the Tax Office will pay interest on the payments that have been delayed at the rate specified by the Reserve Bank of Australia, which is currently at 3.16%. If you are an eligible recipient, you do not have to do anything.
The Tax Office is working closely with the Mercer Super Trust on this matter and will clear the backlog of payments, apply interest automatically and make payments to us.
Interest will continue to be paid until you receive payments or it is paid into the relevant super fund.
If you are suffering hardship as a result of these delayed payments you should contact the Tax Office on 1300 139 027 to discuss your circumstances. The Tax Office can only make payments where you meet the requirements for a direct claim (when you have retired and no longer have a superannuation account eligible to receive the co-contribution).
For more information, refer to the Tax Office's website at ato.gov.au.
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