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. 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 income 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 of $50,000 - allowable business deductions $22,000 = $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.
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Last Modified: Wednesday, 27 June 2012