If you're earning less than $58,445 each year you could be entitled to extra super contributions of up to $500 a year via the government's superannuation co-contribution scheme. But there are a few other eligibility requirements to be aware of.
What is the super co-contribution?
The government superannuation co-contribution is an initiative designed to give a little boost to the retirement savings of low and middle-income Australians. Eligible Australians earning below a certain amount will be entitled to have any extra personal contributions they make towards their super matched by the government. This isn't matched dollar for dollar.
Why was the Government super co-contribution scheme created?
The government super co-contribution scheme was created to help lift the super balances of Australians with lower incomes. Because the compulsory superannuation guarantee sees 11% of your pay directed into your super, those with higher incomes will also have higher super balances. This means Australians with lower incomes throughout their working life can retire with hundreds of thousand of dollars less, especially if they aren't making any extra contributions themselves.
To help combat this, the government designed the co-contribution initiative to not only contribute some money to the super funds of low-income earners, but to encourage low-income earners to make voluntary contributions to their super.
Who is eligible for the government co-contribution?
To be eligible to receive the government super co-contribution you need to meet the following income tests for the 2023/24 financial year:
- If your annual income is less than $43,445: You're entitled to the full co-contribution of $500.
- If your annual income is between $43,445 and $58,445: You're entitled to part of the government co-contribution, but not the entire co-contribution. The contribution amount will gradually decrease the more you earn.
- If you earn more than $58,445 per year: You're not eligible for any co-contribution.
That is, you receive the maximum co-contribution of $500 if your income is equal to or less than the lower threshold and you make personal contributions of $1,000 into your super account. The government matches your contributions with 50c for every dollar you put in, with a potential maximum of $500 in the 2023/24 superannuation co-contribution scheme.
The table below illustrates the potential super co-contribution you may be eligible for in the 2023/24 financial year, depending on the amount you contribute as an after-tax contribution before 26 June 2024.
|If you earn||You contribute||The maximum you could get|
|$58,445 (or more)||$0||$0|
Along with the income tests, you must also meet the following eligibility criteria:
- At least 10% of your income needs to come from employment or from running your own business
- You've made at least one personal (after-tax) contribution to your superannuation fund within the financial year
- You're less than 71 years old
- You're a permanent Australian resident and don't hold a temporary resident visa
- You must lodge a tax return
To better understand this, let's explore how the co-contribution scheme works through a few examples
Maria works as an administrative assistant with an annual salary of $36,000, so she meets all eligibility requirements for a co-contribution. She contributes $40 each fortnight to her super account, totalling $1,040 in the 2023/24 financial year.
Maria is eligible for a co-contribution of $500, which the ATO will pay directly into her super account in October 2024.
Hassan, a 45-year-old delivery driver, earns $55,000 annually and receives $5,000 in investment income from a jointly owned property. In the 2023/24 financial year, Hassan contributed $10,500 to his super account. Unfortunately, Hassan isn't eligible for a super co-contribution this year as his total income of $60,000 p.a. exceeds the maximum income threshold, which is $58,445 p.a.
How to get the government super co-contribution
If you're eligible to receive the government super co-contribution it will be applied automatically to your super account, so you don't need to do anything. The government will use your income statement from your annual tax return to calculate how much of the co-contribution you're eligible for.
The co-contribution will be applied to your super account once a year, usually around the end of the year. For example, if you made a few voluntary contributions within the financial year (ending in June), the co-contribution you're entitled to for that financial year will be added to your account in one lump sum around November or December.
You can't receive the money directly into your bank account. Once added to your super, the co-contribution can't be withdrawn until you've met a condition of release (such as when you've retired).
Once the government co-contribution is applied to your super account, you'll receive a letter or an email from the ATO confirming you've received the payment.
How to make your own voluntary super contributions
There are 2 main ways you can make a voluntary super contribution in order to be eligible for the government co-contribution:
- Salary sacrifice. You can elect to have some of your pay sent to your super account instead of to your bank account via a process called salary sacrifice. Having the money sent from your pay before you receive it means you won't pay tax on the money at your standard income tax rate. Instead, it'll be taxed at the lower super rate of 15%. You can learn all about salary sacrificing into your super in our guide.
- Direct debit. You can transfer money from your bank account into your super account at any time you like via direct debit. This is the same process as transferring money to another bank account.
Do I pay tax on the co-contribution?
If you receive a co-contribution this will go directly into your super, so it won't be assessed as income when you lodge your tax return. It also won't be taxed when it's deposited into your super account.
However, the investment earnings on the money will be taxed in the same way that all your super investment earnings are taxed. This money will come out of the returns before it's applied to your super balance, so you don't need to do anything.
Not eligible for the co-contribution?
If you're not eligible to earn the government super co-contribution, don't worry, there are lots of other ways to boost your super balance. Read our 6-step guide to growing your super balance for some ideas. Additionally to learn more about other contributions have a read of our super contributions guide or if you want to make extra contributions to your spouse, then read our spouse super contribution guide.
The first step to boosting your super balance is to make sure you're with a high-performing, low-fee super fund. You can see some of our best super fund picks to get started.