Superannuation co-contributions are an initiative of the government to boost the superannuation savings of low to middle income earners.

By making a personal contribution to super of up to $1,000 you might be eligible for a ‘co-contribution’ from the government of up to $1,000. Personal contributions are those made from after tax income or your savings.

There is an income level under which you will receive the full co-contribution and this gradually reduces to the upper limit of eligibility.

For the 2009/2010 financial year the lower threshold is $31,920 and the upper threshold is $61,920. The maximum co-contribution of $1,000 reduces by 3.33 cents for every dollar your income is over the lower threshold.

This table will give you an idea of what your co-contribution might be at the maximum contribution level of $1,000.

Income Level Potential Co-contribution
$30,000 $1,000
$35,000 $897
$40,000 $731
$45,000 $564
$50,000 $398
$55,000 $231
$60,000 $65

Amounts contributed less than $1,000 will attract a co-contribution pro rata. In other words if your income is less than the minimum eligible threshold and you contribute $500 then you could expect a co-contribution of $500.

Contributions do not have to be made in a lump sum and you can usually arrange an ongoing regular contribution with your superannuation fund. The annual deadlines for your personal contributions are 30 June.

The Government in the 2010 Federal Budget announced the super co-contribution would be frozen at a maximum of $1,000 going forward. [From now until 30 June 2012 the co-contribution has been set at $1,000 but this is slated to increase to $1,250 thereafter till 30 June 2014 and then increase to $1,500 after this time.]

The thresholds are expected to increase each year as they have done with AWOTE.

Why make superannuation co-contributions?

To gain up to an extra $1,000 per year for your super from the government.

Factors to consider

  • The contributions you make must be personal contributions for which you don’t claim a tax deduction.
  • 10% of your total income must be from eligible employment or carrying on a business (or both).
  • You must be under age 71 at the end of the financial year.
  • You must make sure your superannuation fund has your Tax File Number.
  • Entry fees charged on contributions to your super fund.
  • Access to both your contributions and the co-contribution is restricted as per normal superannuation rules.
  • Co-contributions are paid after you have lodged your personal tax return and the fund has notified the ATO of your contribution.
  • The co-contribution is normally paid into the same fund in which you made your contribution.
  • The income taken into account for the threshold includes; assessable income, reportable fringe benefits and employer super contributions. See the ATO website for more information.

Use the ATO Super co-contribution calculator to work out your situation.

It is highly recommended that you seek professional advice before taking any action.

Disclaimer: Superannuation and taxation rules change regularly and sometimes without notice. Please seek suitable professional advice before taking any action.