I’m self-employed how is my total income calculated?
We calculate your total income by adding your assessable income and reportable fringe benefits minus business income deductions. This means that if you are self-employed and have a high turnover you may still receive a co-contribution.
Is 10% or more of my total income from running a business, eligible employment or a combination?
You can only receive the co-contribution if 10% or more of your total income is active income. Active income is income from running a business, eligible employment or a combination of both.
When we work out what per cent of your income is active, we ignore your business income deductions. This helps self-employed people with low incomes or low profit margins.
The following table shows if your income is included in total income and if it counts as active income.
Income source
Total income
10% Test
Salary or wages including employment income through a company or trust
Yes
Yes
Director fees as a company director
Yes
Yes
Investment income
Yes
No
Income as a sole trader
Yes (net income)
Yes (gross income)
Partnership distribution
Yes
Yes
Distribution from a trust
Yes
No
Example
John is self-employed and makes a personal superannuation contribution of $5,000 to a complying super fund before 30 June 2008. John notifies his fund that he intends to claim a $4,000 deduction for his personal contributions and receives a notice from his fund confirming this.
John’s only income is earned from running his sole trader business. His gross income is $50,000 but his total income is $28,000 once his business expenses are deducted. He is therefore eligible for the co-contribution.
John lodges his income tax return and claims the $4,000 deduction. His fund lodges a member contributions statement (MCS) that reports personal contributions of $5,000 were received. From the MCS and John’s income tax return, the Tax Office determines that $1,000 of John’s personal contributions are eligible for the super co-contribution and makes a payment of $1,500 into John’s superannuation account.
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