Get in now - Government co-contribution

30/04/2010
Provided by Mercer. The information in this article does not necessarily reflect the views of the Trustee.

Make sure you receive the co-contribution you're eligible for in 2010.

If you're eligible to receive a Government super co-contribution payment and you haven't made after-tax contributions for the 2009/2010 financial year, there's still time to boost your super before 30 June 2010!

If you're eligible to receive a Government super co-contribution payment and you haven't made after-tax contributions for the 2009/2010 financial year, then there is still time.

The Government super co-contribution is an incentive designed to encourage people to save for retirement. If your total income is below $61,920 in the 2009/2010 financial year, you may be eligible to receive up to $1 from the Government for every $1 of personal after-tax contributions you make to your super up to a maximum of $1,000.

Generally, 'total income' includes your assessable income plus reportable fringe benefits and salary sacrifice contributions to super. The maximum co-contribution is phased out at 3.333 cents for every dollar above $31,920, eventually cutting out at $61,920.

The following table shows how the co-contribution applies for different after-tax contributions at different income levels:

Your 'Total income' for the financial year The Government's co-contribution if you make an after-tax contribution of
$1,000 $500 $200
$31,920 or less $1,000 $500 $200
$33,920 $933 $500 $200
$37,920 $800 $500 $200
$41,920 $666 $500 $200
$45,920 $533 $500 $200
$49,920 $400 $400 $200
$53,920 $266 $266 $200
$57,920 $133 $133 $133
$61,920 $0 $0 $0

Source: Mercer

Even if your total income is close to the maximum, you may still consider making an after-tax contribution to super not only because of the co-contribution, but also because there may be the potential benefit of compound earnings.

If you're eligible (there are a number of conditions) and you make a personal after-tax contribution to your super before 30 June 2010, some time after your tax return has been finalised the Australian Tax office will forward your co-contribution to your super fund.

However, you should also remember that the contribution caps for after-tax contributions for the year 30 June 2010 are $150,000, or $450,000 averaged over 3 years for people aged under 65. Contributions in excess of this will be taxed at 46.6%.

Of course, everyone's financial circumstances are different, soyou may benefit from seeking professional financial advice about your super and the Government super co-contribution from a licensed or appropriately authorised financial adviser. Getting help with navigating the options available could help you build a retirement nest egg to suit your needs.


 

This information has been prepared by Mercer Outsourcing (Australia) Pty Ltd (MOAPL) ABN 83 068 908 912, Australian Financial Services Licence #411980. Any advice contained in this document is of a general nature only, and does not take into account the personal needs and circumstances of any particular individual. Prior to acting on any information contained in this document, you need to take into account your own financial circumstances, consider the Product Disclosure Statement for any product you are considering, and seek professional advice from a licensed, or appropriately authorised, financial adviser if you are unsure of what action to take. "MERCER" is a registered trademark of Mercer (Australia) Pty Ltd ABN 32 005 315 917. Copyright 2012 Mercer LLC. All rights reserved.
 

LCA Nominees Pty Ltd ABN 61 008 204 939 AFS Licence #240571, as Trustee for Lutheran Super ABN 93 371 348 387.

This website is provided by Mercer Outsourcing (Australia) Pty Ltd (MOAPL) ABN 83 068 908 912, Australian Financial Services Licence #411980. The Trustee pays a fee for the provision of this service, however this fee is not conditional on you using this service or acting on the information or advice provided through this service.