How to get a 50% return on your super before the end of the financial year...
Let the government top-up your super
Congratulations! If you’re a first year out graduate, you are especially well-placed to take advantage of the super co-contribution rules. That’s because you’ve most likely been working fulltime for only half of the current financial year, so you may benefit if you meet the eligibility criteria for co-contributions.
However, if you want to make a 50% return on your money, you’d better do it now!
For eligible Australians, making an after-tax contribution to super (up to $1,000) means the Government co-contributes 50 cents for each dollar you put in (up to $500 maximum).
If you make a smaller after –tax contribution, the government will contribute 50 cents for each $1 dollar you put in, up to a limit, and also depending on your total income
The co-contribution is free money, and best of all, it goes tax-free into your super.
How to access the co-contribution
You don’t need to apply for the super co-contribution. If you are eligible, all you need to do is:
- Make your after- tax personal contributions to your super fund, and
- Lodge your income tax return.
What you need to do now
- Contribute to your super fund – you can make payments throughout the year or contribute a lump sum, if that works is better for you
- Each fund has options about making contributions, eg Bpay or direct debit;
- Your super fund needs your Tax File Number – otherwise it can’t accept your contribution;
- Make any contribution well before 30 June each year. The fund must process your contribution before 30 June for you to receive the co-contribution. It's best to check with your own fund about their contribution cut-off date.
Who is eligible?
- If you’re earning less than $51,813 a year, and
- You make an after-tax, voluntary contribution to your super, you could be eligible to receive a boost from the Government.
- There are a few rules to follow : click here for MoneySmart basic eligility and here for full eligibility details from the ATO.
Salary sacrifice (or pre –tax ) amounts you contribute do not qualify for the co-contribution
How much is the Super co-contribution?
- In 2017-18, for incomes between $36,813 and the upper limit ($51,813), the $ 500 maximum co-contribtion is reduced by 3.33 cents per $1 dollar of income in excess of $36,813.
- To see what your co-contribution could look like for 2017/18 (depending on your income and personal super contributions, check out ATO 28 Nov 2017, or you can do a quick using the MoneySmart calculator
Call us for a quick chat or drop us a line for help with your super and getting your income more tax effective.
For more ideas, check out the Viva blog on Getting a tax deduction for your super.