The Federal Government is giving away money to anyone who makes an after-tax contribution to their super fund, and who earns less than $49,488 a year (for the 2014/2015 year). This is called co contribution. To be eligible for the super co-contribution, your personal contributions need to be paid to a complying super fund.You will be entitled for the tax free contribution from the Government only if you satisfy a work test and age test apart from the income test.
1. Work test
In order to satisfy the work test, you must earn 10% or more of your income from eligible employment, or 10% or more of your income from carrying on a business, or a combination of both.
2. Income test
The Government’s tax-free co-contribution is available for any person who earns total income from employment or self-employment and earns less than $49,488 a year in the 2014/2015 financial year, and makes an after tax contribution to their super fund. This income threshold is indexed each year in line with increase in average weekly earnings.
3. Age test
You must be under 71 at the end of the financial year in which you make your after-tax contribution to be eligible for a co-contribution.
In addition to meeting the above three tests, you need to be a permanent resident or citizen and lodge your income tax return to qualify for the Government’s co- contribution.
All you need to do is make a personal after-tax contribution to your super account. This you can do either through your employer or by yourself paying directly to your super fund. The Tax Office will calculate your entitlement using information from your superannuation fund and tax return.
As the end of the financial year is approaching fast you need to ensure that yourpersonal contribution goes to your super account before 30th June in order to qualify for the co-contribution.
The content of this article is intended to provide a general guide to the subject matter. -Specialist advice should be sought about your specific circumstances.