Super Co-contribution - the end of Financial Year is fast approaching!
Eligibility:
To be eligible for the co-contribution you must:
- have 'total income' received in the financial year less that the total income upper threshold, which is $60,342 for 2008/2009.
- be under 71 years old at the end of the financial year in which the personal contribution is made.
- receive 10% or more of the total income from eligible employment and/or carrying on a business.
- usually only available to Australian residents, or New Zealand permanent residents working in Australia.
- have made personal undeducted super contributions to a complying super fund.
- have lodged an income tax return for the financial year in which personal contributions are made.
What is total income?
Total income is the total of assessable income and reportable fringe benefits amounts.
- it is not taxable income.
- tax deductions do not increase eligibility.
- assessable capital gains will increase assessable income and therefore total income.
- the taxable component of super lump sums, employer termination payments and income stream pension payments may increase assessable income if included in assessable income.
- employer super contributions, including those that are salary sacrificied, do not count towards total income.
Co-contribution rates and thresholds for 2008-2009.
The following rates and thresholds apply for the 2008/2009 financial year:
Lower total income threshold |
Upper total income threshold |
Maximum super co-contribution |
Maximum co-contribution reduction factor |
$30,342 |
$60,342 |
$1,500 |
$0.05 for each $1 income over lower income threshold
|
Quick facts:
- the Government co-contributes $1.50 for every $1 of eligible personal contributions, up to $1,500.
- the maximum co-contribution reduces by $0.05 for every $1 of total income above the lower total income threshold.
- co-contributions:
- are not included in your tax assessable income;
- are not taxable contributions;
- are not counted towards the non-concessional contribution cap;
- are fully preserved.
Quick tips:
- if a self employed person wants to attract the super co-contribution, they must ensure that some of their personal contributions are not claimed as a tax deduction.
- for someone with unrestricted non-preserved monies who meets the eligibility rules, a re-contribtuion of $1,000 could see them receive the co-contribution [this should be confirmed with your accountant and financial adviser before proceeding].
Payment of the co-contribution:
- the co-contribution will usually be paid to the fund that the personal contribution has been made to, unless the ATO receives a separate superannaution fund nomination form [Nat 8676].
- if the member dies, any outstanding Government co-contribution will be paid ot their personal legal representative in the case where the Tax Commissioner is satisfied that the eligible person is deceased.
- if the Tax Commissioner is satisfied that a member is retired and does not have an eligible account, the co-contribution will be paid to a person. A form entitled 'Super Co-contribution - request for direct payment [NAT 10759] must be completed and received by the tax office.
We hope that the above information has helped you to determine whether you would be able to make a personal contribution in this financial year to be eligible for the Government co-contribution. Please remember that the personal contribution must be undeducted, which means that you will not be able to claim a tax deduction for the contribution. If you claim a tax deduction for all of your personal contributions you will not be eligible for the Government co-contribution. If you need any help with your super contributions leading up to 30 June 2009, please do not hesitate to contact our office to speak to one of our advisers on (02) 9894 9155 , or email to taggart@taggartgroup.com.au.
Disclaimer: This information has been extracted from a document provided by Aviva Australia and is general information only. No personal needs or circumstances have been taken into consideration when preparing this information. This information is based on our understanding of the existing legislation, proposed legislation, and rulings as at the date of this publication.