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Super co-contributions |
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The super co-contribution was introduced from 1 July 2003. It is an Australian Government initiative to help low to middle income earners save for their retirement.
If you are eligible and make personal super contributions to a complying super fund or retirement savings account (RSA), the Government will match your personal super contribution with a co-contribution up to certain limits.
Super co-contribution thresholds
The way your co-contribution is determined will depend on the financial year in which you made your personal super contributions.
|
Lower income threshold |
Higher income threshold |
What will I receive for every $1 of personal super contributions? |
What is my maximum entitlement? |
From 1 July 2009 until 30 June 2010 |
$31,920 |
$61,920 |
$1 for every $1, up to a maximum super co-contribution of $1,000 a year. |
Your maximum entitlement is $1,000. However, you must reduce this by 3.333 cents for every dollar your ‘total income’ is over $31,920 up to $61,920. |
From 1 July 2008 until 30 June 2009 |
$30,342 |
$60,342 |
$1.50 for every $1, up to a maximum super co-contribution of $1,500 a year. |
Your maximum entitlement is $1,500. However, you must reduce this by 5 cents for every dollar your ‘total income’ is over $30,342 up to $60,342. |
From 1 July 2007 until 30 June 2008 |
$28,980 |
$58,980 |
$1.50 for every $1, up to a maximum super co-contribution of $1,500 a year. |
Your maximum entitlement is $1,500. However, you must reduce this by 5 cents for every dollar your ‘total income’ is over $28,980 up to $58,980. |
From 1 July 2004 until 30 June 2007 |
$28,000 |
$58,000 |
$1.50 for every $1, up to a maximum super co-contribution of $1,500 a year. For the 2005-06 financial year, an additional one-off payment, doubling your co-contribution was made. |
Your maximum entitlement is $1,500. However, you must reduce this by 5 cents for every dollar your ‘total income’ is over $28,000 up to $58,000. |
From 1 July 2003 until 30 June 2004 |
$27,500 |
$40,000 |
$1 for every $1, up to a maximum super co-contribution of $1,000 a year. |
Your maximum entitlement is $1,000. However, you must reduce this by 8 cents for every dollar your ‘total income’ is over $27,500 up to $40,000. |
Eligibility
From 1 July 2008, you will be eligible for the co-contribution if:
- you make a personal super contribution by 30 June each year into a complying super fund or retirement savings account
- your total income is less than $60,342 (this is indexed annually to reflect changes in average wages)
- 10% or more of your total income is from eligible employment, running a business or a combination of both
- you are less than 71 years old at the end of the year of income
- you do not hold an eligible temporary resident visa at any time during the year
- lodge your income tax return.
Your super fund needs your Tax File Number (TFN) before it can accept your personal contribution or a co-contribution from us. For more information refer to Tax file numbers and superannuation.
|
Remember, you are not entitled to a co-contribution for any amount of personal contributions you choose to claim as a tax deduction. For more information, refer to Claiming deductions for personal super contributions. |
Applying for super co-contributions
You don’t need to apply for the co-contribution. All you need to do is:
- make personal super contributions (after tax) super contributions before 30 June to your super fund or retirement savings account (RSA)
- don’t claim a personal super contribution deduction for at least some of your personal contributions in your income tax return, and
- lodge an income tax return.
Once your super fund has reported your personal contributions to us, and you have lodged your income tax return, we can then calculate if you are eligible. If you are, we will automatically calculate the co-contribution amount and deposit it into your super account.
We make most payments between November and January each year as most contributions are reported to us by then.
If you don’t supply your TFN to your super fund or RSA, they cannot accept your personal contributions and you may miss out on a co-contribution.
Making a personal contribution
Personal super contributions are the amounts you choose to contribute to your super fund from your after tax income. This is in addition to any employer contributions and does not include contributions made through a salary sacrifice arrangement.
You do not need have to contribute the full $1,000 to be eligible – any amount up to $1,000 will attract the super co-contribution. Additionally the personal contributions do not need to be made in a lump sum. You may elect to pay regular amounts throughout the financial year.
Your super fund will be able to tell you how to best make personal super contributions. Most funds offer different options for making contributions including BPAY, direct debit or through your bank account.
In some cases, you may be able to deposit small amounts into your super account directly from your pay – talk to your employer or payroll officer.
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Remember to check your fund’s cut-off date for receiving super payments at the end of each financial year. If your payments aren’t made in time, you could miss out on your super co-contributions for that financial year. |
Calculating the super co-contribution
Super co-contribution calculators
The way your super co-contribution is calculated depends on the income year in which you made your personal super contributions.
The calculators can be used to work out the super co-contribution you could be eligible to receive, based on information you provide about your income and personal super contributions for the relevant income year.
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To work out the super co-contribution you could be eligible to receive based on your income and personal super contributions, use the Super co-contribution calculator. |
2009-10 income year
The maximum co-contribution amount that you can receive ($1,000) is reduced by 3.333 cents for each $1 of your total income over $31,920. The co-contribution phases out completely where your total income is $61,920 or more.
Provided you are entitled to receive the co-contribution, the minimum amount payable is $20.
$1,000 - {[(assessable income + reportable fringe benefits + reportable employer superannuation contributions - business deductions) - $31.920] x 0.0333}
The co-contribution payable is the lesser of:
- the maximum co-contribution amount, or
- the amount of personal super contributions x 1.5.
The co-contribution:
- must be preserved in the fund (it can only be accessed when other preserved amounts can be accessed),
- is not included as income in your tax return,
- will not be subject to any taxation when paid to the fund, and
- will not be taxed when received as a benefit.
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For information on calculating your super co-contribution for previous years see Common questions - How do I calculate my co-contributions for previous years |
2008-09 income year
The formula for calculating the maximum co-contribution amount is:
$1,500 - {[(assessable income + reportable fringe benefits) - $30,342] x 0.05}
The co-contribution payable is the lesser of:
- the maximum co-contribution amount, or
- the amount of personal super contributions x 1.5.
The co-contribution:
- must be preserved in the fund (it can only be accessed when other preserved amounts can be accessed),
- is not included as income in your tax return,
- will not be subject to any taxation when paid to the fund, and
- will not be taxed when received as a benefit.
|
For information on calculating your super co-contribution for previous years see Common questions - How do I calculate my co-contributions for previous years. |
Case studies
Employees
Amanda is an employee who earns an annual salary of $42,000 in the 2006-07 income year. As a result of salary packaging a car, she also has reportable fringe benefits of $8000, and has investments that return an annual dividend of about $6,000.
As well as including her annual salary of $42,000 on her income tax return, Amanda also includes her reportable fringe benefit amount of $8,000, and her dividend income of $6,000 bringing her total income to $56,000.
Amanda also makes personal contributions of $1,000 to her super, above the nine per cent of salary her employer must pay.
Initially, she understood she was eligible for a significant co-contribution, given her salary of $42,000, but the co-contribution is calculated on total income determined by the Tax Office.
In this case, total income is $56,000, comprising salary $42,000, fringe benefits of $8,000 and return on investments of $6,000. With tax deductions of, say, $3,000, taxable income is $45,000. However, the Tax Office calculates any co- contribution on total income.
In the case of Amanda, with a total income of $56,000 and personal super contributions of $1,000, she is entitled to a co-contribution payment is $100 which still represents a 10 per cent return on investment in a matter of months.
Self-employed
In the 2008-09 income year, Oscar has gross business receipts of $43,000, business deductions of $41,500, and other personal investment income of $15,000. Is Oscar eligible for co-contributions?
For the purposes of the 10% test, total income is not reduced by allowable business deductions.
Oscar would be eligible to receive a co-contribution based on the eligibility criteria under the 10% test because the percentage of his gross total income from employment, carrying on a business or a combination or both is 74%.
The 74% figure is calculated as:
Gross business receipts
(Gross business receipts + Other income)
= $43,000 / ($43,000 + $15,000) = 74%
As this percentage is greater than 10% of his total income, Oscar meets the 10% test.
Assuming other criteria have been met, the next step is to calculate the total income for co-contribution threshold purposes. For threshold comparison, total income is reduced by allowable business deductions.
Total income for Oscar for comparison with the lower and higher income thresholds would be calculated as:
(Gross business receipts + Other income) less business deductions
= ($43,000 + $15,000) - $41,500 = $16,500
Oscar has a total income of $16,500 for co-contribution income threshold purposes.
Therefore, Oscar would qualify for the full $1.50 on each $1.00 of personal contributions made (that have not been claimed as a deduction) to a complying fund (up to a maximum of $1,000) as his total income is under the $30,342 lower income threshold.
Common questions
How it works
How will I know that I have received the super co-contribution?
The Tax Office will send you a letter with details about your co-contribution amount after it has been paid to your super fund. Unless you nominate a particular super fund account to us, your co-contribution will usually be paid into the fund where you make your personal super contributions, providing they accept co-contributions. Your super fund should include the co-contribution on your annual member statement.
Are there any types of super contributions that do not attract the super co-contribution?
Yes, The following super contributions do not count for the co-contribution:
- super guarantee contributions paid by your employer
- personal contributions for which a deduction has been claimed
- contributions made by your spouse or any other party on your behalf, and
- salary sacrifice contributions (these are considered to be employer contributions).
How will the super co-contribution be taxed?
The co-contribution will be treated, for taxation purposes, similarly to the personal contributions that it is matching. That is, it is tax free.
The super co-contribution will not be subject to any tax when it is paid to your super fund or retirement savings account and will not be taxed when received as a benefit. However, the earnings on the super co-contribution will be taxed like any other earnings within the super fund or retirement savings account.
How is my total income calculated?
To be eligible to receive the co-contribution your total income needs to be less than the higher income threshold in any income year. Your ‘total income’ is equal to your assessable income plus your reportable fringe benefits. Your total income may be different to your taxable income.
How do I calculate my co-contributions for previous years?
The way your co-contribution is calculated depends on the financial year in which you made your personal super contributions.
2007-08 income year
The maximum co-contribution amount that you can receive ($1,500) is reduced by 5c for each $1 that your total income exceeds $28,980. The co-contribution phases out completely when your total income is $58,980 or more. The co-contribution was also extended to the self employed who earn business income as a sole trader or as a partner in partnership who made personal super contributions from 1 July 2007.
2006-07, 2005-06 and 2004-05 income years
The maximum co-contribution amount that you can receive ($1,500) is reduced by 5c for each $1 that your total income exceeds $28,000. The co-contribution phases out completely when your total income is $58,000 or more.
Note: A co-contribution received as a result of contributions made in the 2005-06 income year, attract an additional one-off payment, doubling your co-contribution entitlement for that year only.
Provided you are entitled to receive the co-contribution, the minimum amount payable is $20.
The formula for calculating the maximum co-contribution amount is:
$1,500 - {[(assessable income + reportable fringe benefits) - $28,000] x 0.05}
The co-contribution payable is the lesser of:
- the maximum co-contribution amount, or
- the amount of personal super contributions x 1.5.
The co-contribution:
- must be preserved in the fund (it can only be accessed when other preserved amounts can be accessed),
- is not included as income in your tax return,
- will not be subject to any taxation when initially paid to the fund, and
- will not be taxed when received as a benefit.
2003-04 income year
The maximum co-contribution amount that you can receive ($1,000) is reduced by 8c for each $1 that your total income exceeds $27,500. The co-contribution phases out completely when your total income is $40,000 or more.
Provided you are entitled to receive the co-contribution, the minimum amount payable is $20.
The formula for calculating the maximum co-contribution amount is:
$1,000 - {[(assessable income + reportable fringe benefits) - $27,500] x 0.08}
The co-contribution payable is the lesser of:
- the maximum co-contribution amount, or
- the amount of personal super contributions.
The co-contribution:
- must be preserved in the fund (it can only be accessed when other preserved amounts can be accessed)
- is not included as income in your tax return
- will not be subject to any taxation when initially paid to the fund, and
- will not be taxed when received as a benefit.
Payment
When will my super co-contribution be paid?
Your co-contribution is payable after:
- you have lodged your income tax return,
- your super fund has lodged a member contributions statement (MCS) for you, and
- the Tax Office has received any additional information required.
We generally receive the required information from super funds by 31 October following the end of the income year. However, some smaller super funds may not be required to report this information until the following 31 March.
Can I choose where the super co-contribution is deposited?
The co-contribution will generally be paid directly into the super account to which you made your personal super contribution, providing that fund will accept the co-contribution.
If you wish to have your co-contribution paid into a particular super fund, you can complete a Superannuation fund nomination form (NAT 8676, PDF 74KB) or phone our information line on 13 10 20.
It is important that this nomination be completed before the Tax Office receives all of the information necessary to make a co-contribution payment.
Can the super co-contribution be paid into my bank account?
No. Unless you are eligible for a direct payment, for example because you have retired, the co-contribution will generally be paid into your super account. The preservation rules that apply to your current super entitlements also apply to the co-contribution.
If you are eligible to receive a direct payment, the co-contribution will be paid to you as a cheque.
What can I do if I believe I should have been paid a co-contribution?
It is important to check that you have met all of the eligibility criteria. You must ensure you have made personal super contributions to a complying super fund or retirement savings account and that your total income (which includes any reportable fringe benefit amounts) is less than the higher income threshold.
If you believe that you have met all of the eligibility criteria, you should phone the Tax Office on 13 10 20 and ask about the reasons why your co-contribution has not been paid.
If you believe that you are entitled to a super co-contribution, you can write to us and request a review of decision.
Self-employed
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.
What to do/read next
For more information, refer to:
Related links
- Super co-contributions calculator
- Tax file numbers and super
- Claiming deductions for personal super contributions
Publications
- Super – what you need to know (NAT 71039)
- Reportable fringe benefits-facts for employees (NAT 2836)
To obtain a copy of our publications or for more information:
- phone our publications distribution service on 1300 720 092, or
- phone 13 10 20.
Last Modified: Monday, 12 October 2009
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