Are you eligible for $500 from the Government?

The Government’s co-contribution scheme is an initiative to help eligible individuals boost their retirement savings. If you earn less than $48,516¹ pa and meet certain criteria, you may want to consider making personal after-tax Super contributions before the end of this financial year. Why? Because the Government will make a co-contribution of up to $500² to your Super account.

Am I eligible?

To qualify for the co-contribution, you must:

– Have a total income below $48,516 for the financial year;

– Earn at least 10% of your gross total income from employment, operating a business or both;

– Be a permanent resident or Australian citizen for the full 2013/14 financial year;

– Be under age 71 at 30 June 2014;

– Make a personal (after-tax) Super contribution by 30 June 2014; and

– Lodge a 2013/14 tax return.

How does it work?

For any eligible person, the Government will contribute up to $0.50 for every $1.00 of personal (after-tax) contributions, up to a maximum of $500. To receive the maximum co-contribution, you must have an income of less than $33,516 for the financial year and will be required to make a personal contribution of $1,000 to your Super. The co-contribution amount reduces by 3.33 cents for every dollar of your income that exceeds $33,516 until it stops at $48,516.

How much could I receive?

The amount you receive depends on the personal contribution made and your income. See the table below for details:

If you make a personal contribution of:	$1000	$500	$250
And your income1 is:	Your Super co-contribution will be:
$33,5161 or less	$500	$250	$125
$34,000	$484	$250	$125
$38,000	$351	$250	$125
$42,000	$217	$217	$125
$46,000	$84	$84	$84
$48,5161 and over	$0	$0	$0

Source MLC

How do I receive the co-contribution?

If you have met the requirements, there is nothing more you need to do. After your tax return has been lodged and the ATO has received necessary information from your Super Fund, your co-contribution will be calculated and automatically deposited into your Super account.

Why should I contribute?

Every eligible person should think about their desired retirement and consider whether it would be in their favour to utilise the Government’s co-contribution. A little more now in your Super can mean a lot more in the future. You may be working full time, part-time, on a casual basis, could be a student or have only worked part of the financial year. You may also have children, family members or friends who could be eligible; whatever your circumstances – it’s important to be proactive with your Super and retirement savings, especially when there are financial incentives for you to do so.

For example

A person earning $38,000 in the 2013/2014 financial year who makes a $1,000 personal after-tax contribution to their Super account would receive an additional $351 tax-free dollars in their Super Fund. While $1,000 may seem like a stretch, it’s possible to make regular contributions throughout the year which would equate to around $19.23 per week.

Want to know more?

It’s important to seek advice when considering contributing to your Super. Every person’s situation and needs are unique and a Financial Adviser can assess these factors to ensure you are managing your money as effectively as possible.

 

This information is based on interpretation of relevant Superannuation and taxation law as at September 2013.

¹ Figures are for 2013/2014 Financial Year.  Income includes assessable income, reportable fringe benefits and reportable employer Super contributions

² The maximum co-contribution is $500 – in 2013/2014.

 

Source: Capstone Financial Planning