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.
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.
