Super co-contribution
Super co-contribution
About the super co-contribution
The superannuation (super) co-contribution is a government initiative to help eligible individuals boost their super savings for the future.
If you are a low or middle-income earner, you may be able to take advantage of the super co-contribution payment by making eligible personal super contributions to your super fund or retirement savings account (RSA). The government will then match your personal super contributions up to the maximum amount.
The maximum super co-contribution payable, and the way we work out this amount depend on the financial year in which you made your eligible personal super contributions.
You don't need to apply. If you're eligible, all you need to do is make eligible personal super contributions to your super fund or RSA and complete the A3 government super contribution labels in your income tax return.
Super co-contribution and tax
The super co-contribution is:
- not subject to tax when it is paid to your super fund or RSA
- not included as income in your tax return
- preserved in a super fund or RSA and can only be accessed when other preserved amounts can be accessed - that is, when a condition of release has been met.
Earnings on the super co-contribution will be taxed like any other earnings of the super fund or the RSA provider.
Eligibility
You will be eligible for the super co-contribution if all of the following apply:
- you make one or more eligible personal super contributions during the financial year into a complying super fund or RSA, and don't claim a deduction for all of them
- you pass the two income tests
- your total income (minus any allowable business deductions) for the financial year is less than the higher income threshold
- 10% or more of your total income comes from eligible employment-related activities, carrying on a business or a combination of both
- you are less than 71 years old at the end of the financial year
- you are not the holder of a temporary visa at any time of the financial year, unless you are a New Zealand citizen or holder of a prescribed visa
- you complete the A3 government super contribution labels your tax return for the relevant financial year.
|
The definition of a temporary resident (for super co-contribution purposes) changed from 1 July 2009. A person will not be eligible for a super co-contribution if they hold a temporary visa (under the Migration Act 1958) at any time during the financial year, unless at all times when they hold such a visa they are either a New Zealand citizen or the holder of a visa prescribed for the purposes of the Superannuation (Unclaimed Money and Lost Members) Act 1999.
For earlier financial years (2008-09 and earlier), you must not hold an eligible temporary resident visa at any time during the financial year.
|
Your super fund needs your tax file number (TFN) before it can accept your personal contribution or a super co-contribution from us.
Income tests
There are two income tests you must satisfy to be eligible for the super co-contribution. The first is the income threshold test, and the second is the 10% eligible income test.
Both income tests use your total income to measure if you meet the eligibility requirements. However, your total income is calculated differently for the purposes of each income test.
|
In both of the income tests, your total income may be different to your taxable income.
|
Income threshold test
Your total income
For the purpose of the income threshold test, from the 2009-10 financial year onwards your total income is the sum of:
- your assessable income for the financial year
- your reportable fringe benefits total (RFBT) for the financial year
- your total reportable employer super contributions for the financial year
less
- your allowable business deductions.
For the 2007-08 and 2008-09 financial years, your total income is the sum of:
- your assessable income for the financial year
- your RFBT for the financial year
less
- any allowable business deductions.
To receive the super co-contribution, your total income (less any allowable business deductions in the 2007-08 and later financial years) must be less than the higher income threshold for that financial year.
|
If you are carrying on a business, you may have a high turnover but still be eligible for the super co-contribution due to your allowable business deductions.
|
Thresholds
There are two super co-contribution income thresholds - a lower income threshold and a higher income threshold. If you are eligible for the super co-contribution and your total income is equal to or less than the lower income threshold, your maximum entitlement will not be reduced. If your income is between the lower and higher income thresholds, when your entitlement is calculated, it is subject to the taper/reduction rate.
The taper/reduction rate is the amount by which your maximum super co-contribution entitlement amount reduces as you move from the lower income threshold amount to the higher income threshold amount. You are not entitled to a super co-contribution once your total income is equal to or exceeds the higher income threshold.
|
The government has announced the following changes that, once passed by parliament, will apply to all co-contributions entitlements in relation to personal super contributions made from 1 July 2012:
- the maximum co-contribution entitlement will be $500
- the matching rate to be reduced to 50%
- the lower income threshold will remain $31,920
- the higher income threshold will be reduced to $46,920.
We will publish updated guidance if these announced changes become law. For more information, refer to Super co-contribution thresholds.
|
10% eligible income test
To satisfy this test, 10% or more of your total income must come from employment-related activities, carrying on a business or a combination of both. These amounts are referred to as eligible income amounts.
For the purposes of this test, your total income is not reduced by your allowable business deductions. This is to ensure self-employed individuals are not disadvantaged by arbitrarily failing the 10% eligible income test in a financial year if they have low income or low profit margins.
For the 2007-08 and subsequent financial years
To satisfy the 10% eligible income test, 10% or more of your total income must come from eligible employment-related activities or carrying on a business (or a combination of both).
Examples of total income and eligible income
The table below is a guide. Working out the exact amount of your total income and eligible income may be complex depending on your circumstances. You may need to seek professional advice to assist you in this regard.
The following table provides some examples of what types of income count towards total income for super co-contributions purposes. This table is only relevant for 2007-08 and later financial years.
|
|
Total income?
|
Eligible income for the 10% eligible income test?
|
Salary or wages, including employment income through a company or trust
|
Yes
|
Yes, where you are treated as an employee for the purposes of the Superannuation Guarantee (Administration) Act 1992 (SGAA).
|
Director fees as a company director
|
Yes
|
Yes, where you are treated as an employee for the purposes of the SGAA.
|
Other employment related income (including tips, employer lump sum payments and employer termination payments and allowances)
|
Yes
|
Yes, where you are treated as an employee for the purposes of the SGAA.
|
Reportable fringe benefits
|
Yes
|
Yes
|
Reportable employer super contribution
|
Yes (from the 2009-10 financial year)
|
Yes (from the 2009-10 financial year)
|
Business income as a sole trader
|
Yes
|
Yes
|
Business partnership distribution
|
Yes
|
Yes
|
Non-business partnership distribution
|
Yes
|
No
|
Distribution from a trust
|
Yes
|
No
|
Other income from individually or jointly held assets (including interest, rent and dividends)
|
Yes
|
No
|
Making eligible personal super contributions
Personal super contributions are the amounts you contribute to your complying super fund or RSA from your after-tax income. These contributions:
- are in addition to any compulsory super contributions your employer makes on your behalf
- do not include super contributions made through a salary sacrifice arrangement.
Your super fund needs your TFN before it can accept your personal super contributions.
To be eligible personal super contributions for super co-contribution purposes, the personal super contributions need to be paid to a complying super fund or RSA, and you must not have claimed (and been allowed) an income tax deduction for them.
You do not need to make your personal super contributions as one lump sum - you can make regular personal super contributions throughout the financial year. Your total eligible personal super contributions at the end of the financial year will be used in super co-contribution calculations.
Your super fund can tell you how to make personal super contributions. Most funds offer different options for making super contributions, including BPAY, direct debit or through your bank account.
In some cases, you can make regular super contributions into your super account directly from your after-tax pay. If the contributions come from your before-tax pay, they are generally referred to as salary sacrificed contributions and will not qualify for the super co-contribution.
|
If your personal super contributions are not received by your fund by 30 June each year, you will miss out on any super co-contribution entitlement for that financial year.
|
|
For more information on salary sacrificed contribution:
|
|
Super contributions that do not attract the super co-contribution
The following super contributions do not attract the super co-contribution:
- super guarantee contributions paid by your employer
- salary sacrifice contributions, which are before-tax super contributions made by your employer and are reportable employer super contributions (when received by the fund, they are treated as employer contributions and not as personal contributions - refer to Salary sacrificing super)
- personal super contributions for which you have been allowed an income tax deduction
- super contributions made by your spouse or any other party on your behalf.
Government super contribution labels in your tax return
When we calculate your super co-contribution, we use your tax return to work out your total income and eligible income. We use item A3 in your tax return to ensure you receive your correct entitlement to a super co-contribution.
In some cases we need additional information to determine these amounts and calculate your entitlement. For example, if you show partnership distributions at item 13 we will not treat them as eligible income under the 10% eligible income test unless you tell us otherwise by completing item A3.
If you do not earn any income from partnerships, trusts or a shared income group, you will not need to complete the additional labels or associated worksheets.
It is not compulsory for you to complete the super co-contribution labels but if they are not completed you may not receive your correct super co-contribution payment.
If you prepare your own tax return, we recommend that you use e-tax to lodge. It will make it easier for you to provide us with the additional information we need to work out your super co-contribution entitlement.
Receiving the super co-contribution
If you are entitled to a super co-contribution, you are not required to do anything to claim it. It will be paid to your fund or RSA after all of the following have occurred for a financial year:
- you have made eligible personal super contributions to your complying super fund or RSA by 30 June
- you have completed the A3 Government super contribution labels your tax return
- you have not claimed (and been allowed) a deduction for all of your personal super contributions in your tax return
- your super fund has reported your personal super contributions to us
- we have received any additional information required.
If your super co-contribution entitlement is greater than $0 and less than $20, we will pay the minimum amount of $20.
Super co-contributions cannot be paid directly to you unless either:
- you have retired, either by reaching preservation age or due to permanent incapacity or invalidity, and no longer have an eligible super account
- you are the legal representative of the account holder, who is deceased.
The preservation rules that apply to your current super entitlements also apply to the super co-contribution.
If you are eligible to receive a direct payment, you may request this payment by completing an Application for direct payment of super co-contribution (NAT 10759).
|
If you have made a direct claim but have not yet received your super co-contribution and you are suffering hardship as a result of the delay, you should contact us on 13 10 20 to discuss your circumstances. We can only make payments where you meet the requirements for a direct claim. To avoid delays, make sure all supporting documents are certified as true copies.
|
Where we pay the super co-contribution
In most cases, we pay your super co-contribution amount directly to the super fund or RSA provider to which you made your eligible personal super contribution, unless they tell us that they cannot accept super co-contribution payments.
If you have more than one super fund or RSA and you want your super co-contribution paid to a particular one, you need to either:
When choosing a super fund, it is a good idea to check whether the super fund accepts both personal and super co-contributions, so that you can boost your super savings in the future. You should also check your super fund's product disclosure statement. This document sets out the details of your policy, including whether you have any insurance cover, how much the premiums are, and any entry/exit fees that may apply.
If you are now retired and no longer have an eligible super account which will accept the super co-contribution then you will be able to make a claim for direct payment. To request a direct payment, complete an Application for direct payment of super co-contribution (NAT 10759).
|
To find out more about how to compare and choose a super fund, visit the Australian Securities & Investments Commission (ASIC) website www.moneysmart.gov.au or call 1300 300 630.
For more information on insurance, visit ASIC's page on insurance.
|
|
It is important that we receive your fund nomination form before you lodge your tax return, to ensure that the super co-contribution is paid to the fund of your choice.
If you have more than one super account, you may want to consider combining them into one super account so that you pay only one set of fees and costs. It also means you can keep track of your money more easily.
|
When we pay the super co-contribution
We make most payments between November and January each year. We receive all the information we need from most super funds by 31 October, following the end of the financial year. However, if you have a self-managed super fund, you report this information in your fund's annual return and may not need to lodge it with us until the following year.
When your fund receives the super co-contribution payment, it will credit your account. The amount received will then appear on your next fund member statement.
|
If the expected super co-contribution payment is not shown on your next fund member statement or the amount received is different to the amount you expected, call us on 13 10 20.
If after calling us you still have concerns, you can write to us and request an explanation or review.
|
If your fund cannot accept your super co-contribution payment (because, for example, they do not have your TFN or the fund's trust deed states they cannot accept super co-contributions) they are required to return it to us with the prescribed information in relation to the co-contribution at the time when the co-contribution is repaid.
We will then determine where to send the payment, based on legislative requirements. We may, as part of this process, ask you which fund to send the contribution to.
|
For more information about these dates, refer to Super reporting and lodgment dates.
|
|
If you don't supply your TFN to your super fund or RSA provider, they cannot accept your personal super contributions and you may miss out on a super co-contribution.
|
If you did not receive or do not agree with your super co-contribution payment
You did not receive your super co-contribution payment
If you think you were entitled to receive a super co-contribution payment but it has not been made, check that you have met all of the eligibility criteria.
If you still think you were eligible for a super co-contribution, you can:
- phone us on 13 10 20 to ask why your super co-contribution has not been paid
- request an explanation or a review of the decision by writing to us at
Interest payment when a super co-contribution payment is delayed
If we are unable to make your super co-contribution payment within 60 days of receiving all the required information, we will pay interest to compensate you for the delay.
If your super co-contribution payment has been delayed, you do not need to do anything.
Interest is calculated using the base interest rate published by the Reserve Bank of Australia, based on the monthly average yield of 90-day Bank Accepted Bills.
Calculating your super co-contribution
The way your super co-contribution is calculated depends on the financial year in which you made your personal super contributions.
|
For rates and income thresholds, refer to Key superannuation rates and thresholds.
|
|
The government has announced the following changes that, once passed by parliament, will apply to all co-contributions entitlements in relation to personal super contributions made from 1 July 2012:
- the maximum co-contribution entitlement will be $500
- the matching rate to be reduced to 50%
- the lower income threshold will remain $31,920
- the higher income threshold will be reduced to $46,920.
We will publish updated guidance if these announced changes become law. For more information, refer to Super co-contribution thresholds.
|
|
The minimum super co-contribution payment is $20. Payment amounts are rounded up to the nearest multiple of 5 cents.
Manual super co-contribution calculations
The following manual calculations allow you to calculate the super co-contribution you may receive. Select the relevant financial year.
Calculation notes
These calculations assume you have met the 10% eligible income test.
When your income falls between the lower and higher income thresholds, your entitlement amount slowly reduces as you move closer to the higher income threshold.
2009-10 to 2011-12 financial years
Calculation 1 - Income threshold test
Work out: total income (assessable income + reportable fringe benefits + reportable employer super contributions - allowable business deductions).
If your total income, less allowable business deductions, is:
- equal to or less than $31,920, go to calculation 2
- more than $31,920 but less than $61,920, go to calculation 3
- equal to or more than $61,920, you are not entitled to the super co-contribution.
Calculation 2
As your total income is equal to or below the lower income threshold, you are entitled to a super co-contribution amount equal to the sum of your personal super contributions, up to a maximum super co-contribution amount of $1,000.
Work out the total of your eligible personal super contributions (up to a maximum of $1,000).
This is the super co-contribution you will receive.
Calculation 3
As your total income is between the lower and higher income thresholds, your entitlement amount slowly reduces as you move closer to the higher income threshold.
Your super co-contribution amount will be the lesser of:
- your maximum entitlement under the taper/reduction rate
- an amount equal to the total of your eligible personal super contributions.
Work out the maximum super co-contribution amount you are entitled to:
$1,000 - ([total income (less allowable business deductions) - $31,920] x 0.03333) = amount A.
Work out your total eligible personal super contributions = amount B.
You will receive the lesser of amount A and amount B.
2008-09
Calculation 1 - Income threshold test
Work out: total income (assessable income + reportable fringe benefits - allowable business deductions).
If your total income, less allowable business deductions, is:
- equal to or less than $30,342, go to calculation 2
- more than $30,342 but less than $60,342, go to calculation 3
- equal to or more than $60,342, you are not entitled to the super co-contribution.
Calculation 2
As your total income is equal to or below the lower income threshold, you are entitled to a super co-contribution amount equal to one and a half times your personal super contributions, up to a maximum super co-contribution amount of $1,500.
Multiply your eligible personal super contribution total by 1.5 (the matching rate).
This is the super co-contribution you will receive (up to a maximum of $1,500).
Calculation 3
As your total income is between the lower and higher income thresholds, your entitlement amount slowly reduces as you move closer to the higher income threshold.
Your super co-contribution amount will be the lesser of:
- your maximum entitlement under the taper/reduction rate
- an amount equal to one and a half times your eligible personal super contributions.
Work out the maximum super co-contribution amount you are entitled to:
$1,500 - ([total income - allowable business deductions - $30,342] x 0.05) = amount A.
Work out your total eligible personal super contributions up to the maximum of $1500.
Multiply your eligible personal super contributions total by 1.5 (the matching rate) = amount B.
You will receive the lesser of amount A and amount B.
2007-08
Calculation 1 - income threshold test
Work out: total income (assessable income + reportable fringe benefits - allowable business deductions).
If your total income, less allowable business deductions, is:
- equal to or less than $28,980, go to calculation 2
- more than $28,980 but less than $58,980, go to calculation 3
- equal to or more than $58,980, you are not entitled to the co-contribution.
Calculation 2
As your total income is equal to or below the lower income threshold, you are entitled to a super co-contribution amount equal to one and a half times your personal contributions, up to a maximum super co-contribution amount of $1,500.
Multiply your eligible personal super contribution total by 1.5 (the matching rate).
This is the super co-contribution you will receive (up to a maximum of $1,500).
Calculation 3
As your total income is between the lower and higher income thresholds, your entitlement amount slowly reduces as you move closer to the higher income threshold.
Your super co-contribution amount will be the lesser of:
- your maximum entitlement under the taper/reduction rate
- an amount equal to one and a half times your eligible personal super contributions.
Work out the maximum super co-contribution amount you are entitled to:
$1,500 - ([total income - allowable business deductions - $28,980] x 0.05) = amount A.
Work out your total eligible personal super contributions, up to the maximum of $1,500.
Multiply your eligible personal super contribution by 1.5 (the matching rate) = amount B.
You will receive the lesser of amount A and amount B.
Examples
The following examples will help you to understand super co-contribution eligibility and calculations.
Self-employed, personal contribution deduction
John is self-employed and in 2009-10 financial year:
- earns all of his income from running his sole trader business - his gross income is $50,000
- has allowable business deductions of $22,000
- makes an eligible personal super contribution of $7,000 to a complying super fund before 30 June 2010 and
- he notifies his fund that he intends to claim a $4,000 deduction for his personal super contribution and receives a notice from his fund confirming this
- he claims a $4,000 deduction on his tax return and has been allowed the amount as a tax deduction.
- the remaining $3,000 is the eligible personal super contribution that is used to calculate his super co-contribution amount.
John must work out if he meets both the income threshold test and the 10% eligible income test if he is to receive a super co-contribution.
John's total income for the income threshold test is:
Gross business income
|
$50,000
|
minus allowable business deductions
|
- $22,000
|
Total income for the income threshold test
|
= $28,000
|
John has met the income threshold test, as his total income of $28,000 is less than the $61,920 higher income threshold for the financial year. Next, he works out if he meets the 10% eligible income test.
All of John's total income comes from running his business, so he meets the 10% income test.
John has satisfied both tests and qualifies for the super co-contribution. As his total income of $28,000 is less than $31,920, the lower income threshold for 2009-10 financial year, he calculates his super co-contribution using calculation 2 for 2009-10 financial year.
John has $3,000 in eligible personal super contributions. However, as this exceeds the maximum super co-contribution amount for this financial year of $1,000, John's super co-contribution entitlement is $1,000.
John will receive a super co-contribution of $1,000.
Employee, no salary sacrifice
Amanda is an employee who in 2011-12 financial year:
- earned an annual salary of $42,000
- salary packaged a car, giving her reportable fringe benefits of $8,000
- had investments that returned an annual dividend of $6,000
- made eligible personal super contributions of $800 to her super fund - these super contributions were in addition to the super guarantee contributions her employer had to make.
Amanda must work out if she meets both the income threshold test and the 10% eligible income test if she is to receive a super co-contribution.
Her total income for the income threshold test is her assessable income plus her reportable fringe benefits:
Assessable income equals
|
|
salary
|
$42,000
|
plus dividends
|
+ $6,000
|
|
|
= $48,000
|
plus reportable fringe benefits
|
+ $8,000
|
Total income for the income threshold test
|
= $56,000
|
Amanda has met the income threshold test, as her total income of $56,000 is less than the $61,920 higher income threshold for the financial year.
Next, she works out if she meets the 10% eligible income test.
When working out if she meets this requirement, she needs to take into account that her personal investment income of $6,000 is not counted as eligible income, but it is part of her total income.
Amanda works out her total income for the 10% eligible income test as follows:
annual salary + reportable fringe benefit
|
x 100
|
annual salary + investment income + reportable fringe benefit
|
Which is:
$42,000 + $8,000
|
x 100
|
$42,000 + $6,000+ $8,000
|
= 89%
This percentage is greater than 10% of her total income, so Amanda meets the 10% eligible income test.
Amanda has satisfied both tests and qualifies for the super co-contribution. As her total income is between the lower and higher income thresholds, she calculates her super co-contribution using calculation 3 for 2011-12 financial year.
Amanda's maximum super co-contribution entitlement is:
$1,000 - ([Total income of $56,000 - $31,920] x 0.03333) = $197.41
This is rounded up to the nearest multiple of 5 cents, giving $197.45 (amount A).
Amanda's super co-contribution based on her eligible personal super contributions is $800 (amount B).
Amanda will receive $197.45, the lesser of amount A and amount B.
Employee, salary sacrifice super contributions
Simone is an employee who, for the 2011-12 financial year. She:
- earns an annual salary of $41,922
- salary packages her car and mortgage costs, which give her a reportable fringe benefit of $4,000
- salary sacrifices $5,000 in super contributions, which her employer pays
- has work-related deductions of $3,000
- makes an after-tax personal super contribution of $200 to her super fund.
Simone must work out if she meets both the income threshold test and the 10% eligible income test if she is to receive a super co-contribution.
For the purposes of the income threshold test, she must take into account that her $3,000 of work-related deductions are not used to reduce her total income, as only allowable business deductions are taken into account.
Her total income for the income threshold test is:
Assessable income
|
$41,922
|
plus reportable fringe benefits
|
+ $4,000
|
plus reportable employer super contributions
|
+ $5,000
|
|
|
= $50,922
|
Minus allowable business deductions
|
$0
|
Total income for the income threshold test
|
= $50,922
|
Simone has met the income threshold test, as her total income of $50,922 is less than the $61,920 higher income threshold for the financial year.
Next, she works out if she has met the 10% eligible income test. When working out if she meets this requirement, she needs to take into account that her $3,000 of work-related deductions are not used to reduce her total income.
However, all of Simone's total income is eligible income, so she meets the 10% eligible income test.
Simone has satisfied both tests and qualifies for the super co-contribution. As her total income is between the lower and higher income thresholds, she calculates her super co-contribution using calculation 3 for 2011-12 financial year.
Simone's maximum super co-contribution entitlement is:
$1,000 - ([total income of $50,922 - $31,920] x 0.03333) = $366.66.
This is rounded up to the nearest multiple of 5 cents, giving $366.70 (amount A).
Her super co-contribution based on her eligible personal super contributions is $200 (amount B).
Simone will receive $200, the lesser of amount A and amount B.
Self-employed, no personal super contribution deduction
Oscar is self-employed and, for 2011-12 financial year, has:
- gross business receipts of $43,000
- allowable business deductions of $41,500
- personal investment income of $15,000
- personal super contributions of $1,200.
Oscar must work out if he meets both the income threshold test and the 10% eligible income test if he is to receive a super co-contribution.
Oscar's total income for the income threshold test is:
Gross business receipts
|
$43,000
|
plus other income
|
+ $15,000
|
minus allowable business deductions
|
- $41,500
|
Total income for the income threshold test
|
= $16,500
|
Oscar has met the income threshold test, as his total income of $16,500 is less than the $61,920 higher income threshold for the financial year.
Next, he works out if he meets the 10% eligible income test. When working out if he meets this requirement, he needs to take into account that his:
- personal investment income of $15,000 is not counted as eligible income, but it is part of his total income
- allowable business deductions are not excluded from his total income for the 10% eligible income test.
Oscar works out his total income for the 10% eligible income test as follows:
Gross business receipts
|
x 100
|
gross business receipts + other income
|
Which is:
$43,000
|
x 100
|
$43,000 + $15,000)
|
=74%
This percentage is greater than 10% of his total income, so Oscar meets the 10% eligible income test.
Oscar has satisfied both tests and qualifies for the super co-contribution. As his total income is less than $31,920, the lower income threshold for the 2011-12 financial year, he calculates his super co-contribution using calculation 2 for the 2011-12 financial year.
He multiplies his eligible personal super contribution total by 1.0 (the matching rate):
As $1,200 exceeds the maximum super co-contribution payable of $1000, Oscar's super co-contribution entitlement is $1000.
Oscar will receive $1,000.
What to do/read next
Related links
Publications
To obtain a copy of our publications or for more information:
- phone our publications distribution service on 1300 720 092
- phone us on 13 10 20.
Last Modified: Tuesday, 21 May 2013
|