SuperEasy® - Superannuation Co-contribution

HOME

SUPERANNUATION

SIMPLER SUPER

SUPER SPLITTING

CO-CONTRIBUTION

HOW MUCH SUPER

TRANSITION

INTERNATIONAL

CONTACT

Superannuation Co-contribution

We can presently read in various newspapers, articles about the alarming issue facing the European Union countries. The issue relates to the fact that these countries will be unable to support their growing number of retires with rising life expectancy, at the current pension level, while simultaneously the birth rates are declining.

Unlike Australia, The European Union countries collect the money for age pensions from the general taxation and from the compulsory savings arrangements made from workers wages. In Australia we also have voluntary savings, super co-contribution and a well-developed compulsory retirement saving model. By introducing compulsory savings and allowing for voluntary contributions, Australian governments have taken the right steps towards creating funding for its ageing population. Further more, the Australian superannuation model is now being considered as one of the best in the world, and researched by the Europeans.

One of the government's initiatives, that is expected to improve the overall superannuation funding in Australia, is the Super Co-contribution scheme. This scheme was introduced on 1st of July 2003. The Co-contribution means, that for each dollar of the personal undeducted contribution* into a fund, the Government will pay $1.50 into the fund, up to the maximum of $1,500, at an annual income rate of $28,000 or less, reduced by 5 cents for every dollar between $28,000 to a maximum of $58,000. This means if your total income is $28,000 or less, the Government will contribute to your super $1.50 for every dollar you contribute to the super fund, up to a maximum of $1,500. The total income represents your assessable income plus your fringe benefits. If your income is more than $28,000, but less than $58,000, your Super Co-contribution will be adjusted based on your income and personal super contribution, see below:

Super Co-contribution sliding scale for 2004/05 tax year

Personal super contribution	$1,000	$800	$500	$200
Your Income:	Your Super Co-contribution will be:
$28,000 or less	$1,500	$1,200	$750	$300
$30,000	$1,400	$1,200	$750	$300
$32,000	$1,300	$1,200	$750	$300
$34,000	$1,200	$1,200	$750	$300
$36,000	$1,100	$1,100	$750	$300
$38,000	$1,000	$1,000	$750	$300
$40,000	$900	$900	$750	$300
$42,000	$800	$800	$750	$300
$44,000	$700	$700	$700	$300
$46,000	$600	$600	$600	$300
$48,000	$500	$500	$500	$300
$50,000	$400	$400	$400	$300
$52,000	$300	$300	$300	$300
$54,000	$200	$200	$200	$200
$56,000	$100	$100	$100	$100
$58,000	$0	$0	$0	$0

Who is eligible for the Super Co-contribution?

To be eligible for the Government Super Co-contribution, in the year of income, you will need to:

Make personal contributions to a complying superannuation fund or Retirement Savings Account (RSA),
Earn less than $58,000 a year before the income tax,
Receive 10% or more of your income as an employee,
Be under 71 years of age,
Not hold an eligible temporary resident visa,
Lodge an income tax return for the year of income.

How does it work?

If you are eligible for the Super Co-contribution, you need to make personal contributions to the complying super fund or RSA. At the end of a financial year, you need to lodge your personal tax return for the year with the Australian Taxation Office (ATO). The ATO will use this information together with the information supplied from your superannuation fund or RSA about your personal contributions, and will automatically calculate the Super Co-contribution amount and deposit it into your super account.

*Personal undeducted superannuation contributions are contributions made by a person to a complying superannuation fund or RSA that are not eligible as claim for a tax deduction and where the tax has been already taken at the person's marginal tax rate (after tax income). Undeducted contributions are not subject to any taxation when initially paid to the fund and not taxed when paid as an end benefit.

Undeducted contributions are not contributions made:

by your employer
as part of a salary sacrifice, or

on behalf of another person - for example your spouse.

SuperEasy Pty Ltd is not licensed to provide advice on investments, or legalities of the types of investments that you can have. SuperEasy® strongly recommends that you seek professional advice before making any investment choice or decision!

Copyright© 2000 - 2006 SuperEasy® Pty Ltd - ACN 092 141 083

By accessing and viewing www.supereasy.biz you agree
to be bound by the Terms and Conditions of this website.
SuperEasy® reserves the right to modify the Terms and Conditions at any time.
Please read the Terms and Conditions.