What are super co-contributions?

Personal Finance Writer · 22 November 2021
Who doesn’t love a financial helping hand from the government? That’s exactly what co-contributions are – extra cash paid into your super by the federal government, when you make a personal contribution of your own.

Super is an investment designed to provide money to live on in retirement. That makes it worth looking at ways to steadily grow your super savings. But not all Australians will accumulate enough super to enjoy a high quality lifestyle when they hang up their work boots.

That’s where the super co-contributions scheme comes in. It’s a government-funded incentive aimed at helping people boost their retirement savings.

How do the super co-contributions work?

If you are a low to middle-income earner, the government may chip in a co-contribution worth up to $500 each financial year, when you add a bit extra to super from your own pocket through voluntary after-tax contributions, according to the Australian Taxation Office (ATO).

The beauty of co-contributions is that you don’t need to fill out forms or other paperwork to apply for a co-contribution. As long as your super fund has your tax file number, the value of any co-contribution will be automatically calculated and paid into your fund after you’ve lodged your annual income tax return, the ATO states.

Who is eligible for super co-contributions?

The annual income limits for government co-contributions are adjusted each year – as we’ve seen, the upper income limit for 2021/22 is $56,112, according to the ATO.

Other rules apply to be eligible for a co-contribution. As a general guide, you need to:

  • Make a contribution to super that you don’t claim as a tax deduction
  • Have contributed less than the annual limit for after-tax contributions – currently $110,000 annually
  • Lodge a tax return for the financial year
  • Be a citizen or permanent resident of Australia aged under 71
  • Provide your  tax file number to your super fund, and
  • Earn at least 10% of your total income from employment and/or running a business.

How much co-contribution will I receive?

How much co-contribution you may receive depends on two things: Your income, and the size of your personal contribution.

If your total income for the financial year is $41,112 or less, you may be entitled to receive 50c in a co-contribution for every $1 you pay into your super – up to a maximum of $500.

As a guide, if you add $1,000 to super from your own pocket, the maximum co-contribution is worth $500. Or, if you contribute, say, $400 from your own money, the co-contribution will be worth $200.

You may still be eligible for a co-contribution if you earn up to $56,112 annually. However, the amount you receive as co-contribution will steadily fall as your income gets closer to $56,112. For example, if your income is $50,112 and you contribute $500 to super, your co-contribution (if you’re eligible) would be $200. If your income is $53,112, you may only receive a co-contribution of $100 when you make a personal contribution of $500.

Are there any downsides to co-contributions?

Making an extra contribution to super can help to grow your retirement savings – and a co-contribution can make a valuable difference over time.

Be aware though, you can’t normally access either your personal contributions or any co-contributions until you reach preservation age. For most of us, that’s between ages 55 and 60 depending on when you were born.

If you have any queries around whether you’re eligible for a co-contribution, it could be worth speaking with your super fund and/or obtaining suitably qualified financial advice.


Cover image source: Viktoria Kurpas/Shutterstock.com

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