Would you like to find a way to boost your Superannuation by $500 a year?
The Super co-contribution scheme is a way for eligible Australians to receive up to $500 for free from the Australian Government to help with their retirement savings (Superannuation).
This scheme is for lower income earners and puts forward an incentive to everyday Australian’s to make personal superannuation contributions throughout the financial year.
If you are eligible, the Government will give you 50 cents for each dollar you put in to your Superannuation account up to $500 (from the ATO) depending on your income levels. As the income eligibility is a sliding scale, it could be slightly less.
For instance; if you are eligible and make a personal contribution of $1,000, you will receive the full $500. If you rinse and repeat this strategy as a low income earner, over 10 years you could have an extra $5,000 + any potential growth that money may earn you.
Who is eligible for the superannuation co-contribution scheme?
The rules are always changing. It’s best to visit the ATO website (or alternatively look at Industry Super) to receive up to date eligibility information. The scheme is largely for low income earners, so if you earn over $50,000 p.a. – it’s unlikely you will get much (if any) benefit from this generous co-contribution scheme.
How much will your Super co-contribution payment be?
This changes with each financial year. To get a rough idea, see the contribution summary from the ATO for the 2016-2017 year below.
It gives you a good indication of how the amount you will be paid correlates to your earnings.
The more you make, the lower the contribution you will receive. Once you go over a certain level of earnings, you can no longer receive the benefit.
To get a more accurate estimate, you can also use the ATO’s Super Co-Contribution calculator.
How do you make co-contributions to your Superannuation account?
Making personal contributions to your Superannuation fund is simple, all you need to do is contact your Super fund and ask them for their payment details (and reference numbers). These details will give you the ability to transfer extra funds into your Super account via a range of method, often including BPAY and Bank Transfer. Once you have these details, you can easily setup a recurring deposit from your everyday account so that you don’t forget to contribute each month. Depending on your cash flow, this could be beneficial as a small $83 monthly transfer will equate to $1,000 of personal contributions after 12 months.
Alternatively, you can opt to make a lump sum contribution (in one big deposit) before the cut-off dates. This can be particularly beneficial if you receive a lump sum of money, like a tax refund or windfall of money (like a bonus).
Remember, personal super contributions need to be payments to your super account that you make above and beyond your regular employer contributions (the payments your employer pays for you). This means you’ve already paid tax on the money you are depositing.
How will you receive your co-contribution payment?
Assuming you are eligible and that you have made a personal contribution to your Superannuation in that financial year, all you have to do is submit your tax return per normal and ensure that your Super fund has your tax file number (TFN) on record.
This is how the ATO will identify you and process the contribution directly into your Superannuation account.
What is the minimum co-contribution amount you can make?
You can deposit whatever you like into your superannuation account, however if you wish the ATO to match via co-contributions, you will need to deposit more than $20.