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Are you eligible for a super co-contribution?

November 24th, 2014

If you are a low-to-middle-income earner, you may be entitled to some financial help from the government in the form of a super co-contribution.

The government makes co-contributions to match personal contributions made to complying superannuation funds and retirement savings accounts by eligible taxpayers.

To be eligible, a person must earn 10% or more of total income (before allowable business deductions) from eligible employment, carrying on a business or a combination of both.

Eligible employment generally means anything resulting in being treated as an employee.

Amounts from eligible employment also includes some income of employees who think of themselves as being self-employed, such as those who run their business through a company and the company pays them salary or wages.

How the ATO determines total income

Total income is not the taxable income. It represents the assessable income plus reportable fringe benefits total plus superannuation salary sacrifice contributions.

For individuals, assessable income is the income before deductions are allowed. The reportable fringe benefits total is the amount included in the reportable fringe benefits total section on the income tax return.

For the self-employed, and for the purposes of determining eligibility for the co-contribution under the 10% test, total income is the sum of assessable income and reportable fringe benefits not reduced by deductions allowable for carrying on a business.

When calculating the total income to compare with the co-contribution income thresholds, the total income is assessable income plus reportable fringe benefits less allowable deductions for carrying on a business.

From July 1, 2009, deductible personal superannuation contributions must now be included in the total income calculation for self-employed members.

The following table provides some examples of how total income is counted for co-contributions:

Total income

Eligible income for the 10% eligible income test

Salary or wages, including employment income through a company or trust Yes Yes, where you are treated as an employee for the purposes of the Superannuation Guarantee (Administration) Act 1992
Director fees as a company director Yes Yes, where you are treated as an employee for the purposes of the Superannuation Guarantee (Administration) Act 1992
Other employment related income (including tips, employer lump sum payments and employer termination payments and allowances) Yes Yes, where you are treated as an employee for the purposes of the Superannuation Guarantee (Administration) Act 1992
Reportable fringe benefits Yes Yes
Reportable employer super contribution Yes (from the 2009-10 income year) Yes (from the 2009-10 income year)
Business income as a sole trader Yes Yes
Business partnership distribution Yes Yes
Non-business partnership distribution Yes No
Distribution from a trust Yes No
Other income from individually or jointly held assets (including interest, rent and dividends) Yes No


Maximum co-contribution for 2014/2015

The Federal Government announced the maximum co-contribution will remain at $500 for the 2014/15 financial year. Working out the super co-contribution, a decision can only be made by the Australian Tax Office on whether a co-contribution is payable after:

  • A person has lodged their income tax return, including details of superannuation salary sacrifice contributions.
  • Their superannuation fund has lodged a member contributions statement (MCS) for members, and
  • The ATO have received any additional information required.
  • Once the ATO has received all the necessary information, the co-contribution will generally be paid within 60 days.

The following table sets out co-contribution examples for the 2014/15 tax year:

Contributions made in the 2014–15 income year

If your personal super contribution is:





 And your income is:

Your super co-contribution will be:

 $34,488 or less $500 $400 $250 $100
 $37,488 $400 $400 $250 $100
 $40,488 $300 $300 $250 $100
 $43,488 $200 $200 $200 $100
 $46,488 $100 $100 $100 $100
$49,488 or more $0 $0 $0 $0


Please note that the above examples are estimates only, the ATO will determine superannuation cocontribution eligibility and amounts. The ATO has calculators on their website that allows you to estimate your co-contribution amount.

Preservation and taxation

The preservation rules mean that the co-contribution will be treated as a preserved benefit. Preserved benefits must be retained in a superannuation fund until the member has met a condition of release. The superannuation co-contribution is not included as income in your tax return. It will not be subject to any taxation when initially paid to the fund, and will not be taxed when received as a benefit.

In conclusion, the superannuation co-contribution has become an important part of the superannuation environment. However, as with any financial commitment, it is important to review the consequences before implementing a co-contribution strategy. If members are seeking information on the co-contribution scheme, it is available through the ATO publication Super co-contribution – Saving now for your future.