Super Strategies - Straightforward Financial Planning

Super Strategies

Co Contribution Scheme

The government co-contribution scheme is designed to give the super of low to middle income earners a free kick. What other scheme gives your money an instant return?

How it works

When you make an after-tax contribution into your super, and you earn up to $33,516, the government will contribute up to a maximum of $500 tax-free into your super fund.

The amount decreases by 3.33c for every dollar above this and cuts out at $48,516 (2013-14). This represents an instant return of up to 50%on your $1,000.

The government's co-contribution is not taxed on its way into the fund and is not included in your non-concessional contributions cap. The co-contribution is not included as income in your tax return.

Superannuation contributions are subject to different taxes depending on earnings.

Eligibility

make a personal non-concessional contribution to a complying super fund, have total income (assessable income, reportable employer superannuation contributions and reportable fringe benefits less certain business deductions) of less than $48,516,
receive 10% or more of your total assessable income, reportable employer superannuation contributions and reportable fringe benefits from eligible employment, carrying on a business or a combination of both,
be less than 71 years of age at the end of the relevant financial year,
not be the holder of a temporary visa (with some minor exceptions), and;
lodge an income tax return for the relevant year.
Note that the amount you receive as a government co-contribution depends on the level of your income, please refer to the super co-contribution table below.

Super for the Self Employed

Superannuation is important for all Australians, even if you're self-employed and especially because you don't receive regular employer contributions. Retirement is an important goal and it's even more imperative you don't fall behind.

What you need to know

As these Personal contributions are coming from your pre-tax income that you claim as a tax deduction, they are considered concessional contributions.
They attract the contributions tax of up to 15%*. This can make claiming a tax deduction tax-effective if you are earning over $37,000.
You will need to fill out a Notice of Intent (NOI) form which has conditions on when it needs to be lodged.
You are still subject to the non-concessional caps.

NOI timing

You will need to provide your super fund with the NOI form before:

you lodge your income tax return for the year you are claiming in

the end of the following financial year

you can make any withdrawal from your super

you apply to split contributions with your spouse.

Eligibility

To be considered self-employed, no more than 10% of your total:

assessable income (ie gross income before tax deductions)
reportable employer superannuation contributions**, and
reportable fringe benefits,
for the financial year may be earned as an employee. This means you need to earn at least 90% of your income from your self-employed work.

This tax deduction is only available for:

people under age 75
people under age 18 if they earned income as an employee or ran their own business during the financial year
Contributions made to your own account, which means spouse contributions, employer contributions or contributions coming from anyone other than you cannot be used to claim a tax deduction.