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What is the government superannuation co-contribution?

You might be eligible to receive extra contributions to your super with the government's co-contribution initiative.

Alison Banney
Alison Banney

Updated

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If you're on a low income, you could be entitled to extra super contributions via the government superannuation co-contribution scheme. But there's a few other eligibility requirements to be aware of.

We'll outline what the government co-contribution scheme is plus who is eligible for it and what you need to do to get it in this guide.

What is the government super co-contribution?

The government superannuation co-contribution is an initiative designed to boost the retirement savings of low and middle-income Australians. Eligible Australians earning below a certain amount will be be entitled to have any extra personal contributions they make towards their super matched by the government. Although, this isn't matched dollar-for-dollar.

Why was the 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 9.5% 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 into 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:

  • If your income is less than $53,564: You're entitled to part of the government co-contribution, but not the entire co-contribution.
  • If your income is less than $38,564: You're entitled to the full co-contribution.
  • If you earn more than $53,564: You're not eligible for any co-contribution.

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 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

How to receive 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, 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 your'e eligible for, if any at all.

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 conditions 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 two 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 to 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's lots of other way to boost your super balance. Read our six-step guide to growing your super balance for some ideas.

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