| Article Date: January 19, 2005
The Federal government has improved the superannuation co-contribution for the tax year commencing 2004/2005. In doing so, it will contribute, $1.50 for each $1, personal after tax contributions of up to $1,000 for persons earning up to $28,000 per annum. For persons earning more than $28,000, the contribution will reduce, until it cuts out when annual earnings reach $58,000.
The Government co-contribution and your after tax contribution are not taxed when they enter the fund. The interest or growth on these contributions are taxed at 15% in the fund, but are also free of tax when withdrawn on retirement.
The co-contribution entitlements cannot be determined until the Australian Tax Office has received all superannuation reporting (usually on 31 st October each year for the preceding financial year) and you have completed your tax return for the relevant financial year.
Other relevant requirements are:
- That you make your personal after tax contributions into a complying superannuation fund or Retirement Savings Account.
- That you receive your super contributions from your employer in the same tax year.
- That you are not eligible to claim your personal super contributions as a tax deduction.
- That you lodge an income tax return.
- That you are less than 71 years of age at the end of the relevant tax year.
- That you are not an “eligible temporary resident” at any time during the relevant tax year.
Note: The earnings thresholds includes assessable income and reportable fringe benefits.
Calculating your co-contribution
| Income |
Personal Contribution |
Government Co –Contribution Amount |
| $28000 or less |
Variable |
Personal contribution x 1.5 (max = $1,500) |
| $28000 to $58000 |
$1- $1000 |
The amount will be the lesser of:
- Personal contribution x 1.5, or
- $1500- [0.05 x (income* - $28000)]
*Assessable income + reportable fringe benefits |
| $28000 to $58000 |
$1000 or more |
$1500 – [0.05 x (income* -$28000)]
*Assessable income + reportable fringe benefits |
To assist you to get an overview of the co-contribution at a glance the ATO has developed the following table.
(Bold indicates reduced amount)
| Your Income per annum |
GOVERNMENT CO-CONTRIBUTION FOR A Personal contribution of $1000pa |
GOVERNMENT CO-CONTRIBUTION FOR A Personal contribution of $500pa |
| $28,000 or less |
$1,500 |
$750 |
| $30,000 |
$1,400 |
$750 |
| $34,000 |
$1,200 |
$750 |
| $38,000 |
$1,000 |
$750 |
| $42,000 |
$800 |
$750 |
| $46,000 |
$600 |
$600 |
| $50,000 |
$400 |
$400 |
| $54,000 |
$200 |
$200 |
| $58,000 |
$0 |
$0 |
SOURCE: ATO
Notes:
- The non bolded figures indicate when you will receive a $1.50 Government Co-Contribution for your $1 contribution.
- Co-Contribution thresholds will be indexed to A.W.O.T.E.
- The co-contribution can be used in combination with salary sacrificing. However, advice should be sought as to when the co-contribution looses it’s effectiveness.
Receipt of Co- Contribution Entitlements
- All contributions, including contributions for insurance premiums only are counted as contributions for the purpose of determining if co contributions apply.
- The ATO will use the information in the superannuation member’s tax return, plus contributions reported by the super fund to determine eligibility for co-contributions.
- Super contributions must be reported to the ATO by the fund by 31 st October (for the previous financial year).
- The co-contribution, as determined by the ATO, will be paid to an “eligible account’ nominated by the member, but excludes insurance-only accounts.
- Should the member not nominate an account, the co-contribution will be paid to an eligible account in the following order:
- An account that has received a co-contribution in the current financial year.
- An account that has received the most reported eligible personal super contributions in the most recent financial year.
- An account that was most recently opened with reported eligible personal super contributions.
- An account with the highest account balance containing reported eligible personal super contributions.
- To an account as determined by the ATO Commissioner.
- Finally, to a Superannuation Holding Account Reserve (SHAR).
- Deceased members will have the co-contribution paid to a legal representative.
- Retired members will have the co-contribution paid to them personally.
Prime Super
PO Box 2229, Wollongong, 2500
Free call 1800 675 839 Free fax 1800 023 662
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