Superannuation Co-Contribution
Dated: May 2004
You can now receive
up to $1,000 from the government in 2004
If you earn less than $40,000
pa and make a personal contribution to superannuation, the government
will also make a payment under their Super Co-Contribution Scheme.
If you earn less than $27,500
pa the government will match any personal contribution (up to $1,000)
on a dollar for dollar basis. If you earn between $27,500 and $40,000
the Super Co-Contribution will be adjusted based on your income and
how much you personally contributed. Contact us for further information
on your entitlement.
To be entitled to a government
co-contribution you must:
- Have received employer super support
(SGC) during the year;
- Be employed full-time; part-time or
on a casual basis. You are not eligible if you are wholly or substantially
self-employed;
- Make a personal contribution to a
superannuation fund this financial year;
- Lodge a tax return this year;
- Be a low income earner (eg have assessable
income and reportable fringe benefits of less than $40,000); and
- Be less than 71 years old;
Anyone that meets the above
criteria should seriously consider taking advantage of this scheme.
With the government matching your personal contributions you can receive
up to a 100% return on your investment.
The above scheme is very
good, but not everybody has a surplus $1,000. Glenn Setches and Lis
Keilty of OzPlan Financial Services have some strategies that could
be looked at to take advantage of this scheme:
- Redraw from your housing loan. A
7% interest expense on $1,000 is only $70 pa, compared to $1,000
received from the government.
- Withdraw non-preserved super funds
and re-invest as personal contributions.
- Withdraw from other investments. Which
investment will give you a better return?
- Reduce salary sacrifice arrangements
of a higher income earner.
These are a few strategies
that can be looked at to take advantage of this free $1,000 from the
government. There are also other strategies that can be used, so if
you wish to discuss this scheme further give Glenn or Lis a call.
Also don’t forget
about your children or grandchildren. If they meet the above working
criteria they can also participate in this scheme. This would be a good
starting point to build wealth for their future.
In certain circumstances
it will also be possible to not only receive the $1,000 co-contribution
but also the $450 spouse tax rebate for low income earning spouses.
The superannuation co-contribution
has been upgraded to $1,500 in 2005 with threshold changes. This can
be viewed on the News
& Articles page of this Patison Partners website under the Superannuation
section.