Government Co-contribution Scheme
The Government co-contribution is a payment the Government makes to your SMSF if you earn less than $53,564 and you make non-concessional (voluntary after-tax) contributions to your SMSF. In 2012, it was a dollar-for-dollar contribution up to $1000. From 2013 onwards, it is 50 cents per a dollar, which can be up to $500 and not lower than $20.
Eligibility
You are eligible for the co-contribution if you lodge a tax return, is under the age of 71 and earn less than $53,564 (best if it is under $38,564).
How is the Co-contribution Calculated?
The co-contribution amount depends on:
- the personal after-tax contributions in the SMSF (up to $1000)
- your personal taxable income for the financial year ending 30 June
To get the full government co-contribution, your taxable income must be less than $38,564 for the year and the co-contribution phases out at $53,564. To see how the co-contribution tapers off between $38,564 and $53,564, click here.
Non-concessional Contributions
You can make personal after-tax contributions any time before the end of the financial year. When we lodge the SMSF tax return, the Tax Office will match your non-concessional contribution (after-tax contribution) to your taxable income. If you are entitled to a co-contribution, based on the criteria as set out above, you will receive a co-contribution cheque from the ATO.
Examples
To see some examples on how this works, see the examples provided on the ATO website by clicking here.
ATO Follow-up
When Superannuation Warehouse handles your SMSF, we cannot see the co-contribution on your personal taxation account. You can call the ATO on 13 10 20 and then do fast key code 2 2 2 to go directly to the co-contributions area to follow up on outstanding co-contributions.
Children in an SMSF Receiving the Co-contribution
There is no minimum age to receive the co-contribution. If your child submits a tax return, has taxable income and is eligible for government co-contribution, the child will receive a co-contribution.
Just remember for minors, high tax rate is applied if their income (other than excepted income) exceed $1,307. Additionally, no tax is paid if trust distribution is $416 or lower.
