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MONEY HABITS

How Government super co-contributions work

17 December 2021

If you earn under a certain amount and personally contribute to your super from your take-home pay, the Government may make a super co-contribution for you. Your income plays a big part in this, so your co-contribution might not be the same as someone else’s.

How income affects co-contributions

If you earn less in a financial year than the Government’s co-contribution threshold, you may be eligible for a super co-contribution. How much co-contribution you could receive depends on how much you earn and any personal contributions you make.

Note that co-contribution eligibility can depend on your circumstances. For example, claiming a tax deduction on your personal contributions will make you ineligible to receive co-contributions.

Consider developing a co-contribution strategy

An end of financial year super strategy is a great way to take full advantage of co-contributions.

If you’re a middle or low-income earner, working out your income before 30 June can give you a better idea of how much you might like to personally contribute. This is because co-contributions decrease as your income goes over income thresholds, with the maximum possible co-contribution being $41,112 for the 2021/2022 financial year. However, you won’t have to personally contribute as much to get the full benefit if this applies to you.

For example, if you earn $37,000 during a financial year, personally contributing $1,000 will land you the full co-contribution benefit of $500. On the other hand, if you earn $50,112, you’ll only have to contribute $400 to get the highest co-contribution you’ll be eligible for ($200).

To get an idea of how much you could receive, check out Suncorp super’s co-contribution calculator.

Making additional contributions could add up over time

Because super interest compounds over time, even smaller co-contributions can add up in the long run. In the graph below, you can see how adding $20 after-tax (personal contribution) per week to your super – and receiving the co-contribution when you’re eligible – can add up over time. The totals represent the additional amount of super you could have at retirement even taking into account relevant fees and costs and other assumptions.

Important information: This chart is for illustrative purposes only. The results were generated by our superannuation contributions calculator based on input of the following information: the 3 different starting ages noted, starting salary of $30,000 (after tax), $20/week personal contribution, employer contribution of 10% and retirement age of 67 years. The dollar amounts are projected estimates of how much more super you could have when you retire, subject to the various assumptions you can find on our superannuation contributions calculator page, including salary increases at 3.2% each year, admin fees of 0.75% pa and $1.5/week , investment fees of 0.2% pa are deducted from the earnings rate and investment returns are 6.3% pa. The calculator also factors in that you may cease being eligible for the maximum co-contribution or any co-contribution at all depending on salary level. Please read the assumptions carefully.

How to receive co-contributions

If you’re eligible, receiving a co-contribution simply requires you to personally contribute to your own superannuation. For example, by transferring money from a bank account or debit card into your super account. This means that salary-sacrificed or compulsory super contributions made by employers don’t count towards the co-contribution amount. This amount doesn’t need to be transferred as a lump sum, either. You have the option of making smaller payments throughout the year – such as regular, smaller scheduled transfers – and the total amount contributed will be tallied come tax time. Keep in mind that there are limits on how much you can contribute to super each year. 

When your co-contribution is paid

Co-contribution amounts are worked out based on after-tax contributions made before 30 June, regardless of when you submit your tax return. While the payments will end up in the fund where your contributions are made, they aren’t paid immediately. The majority of super co-contribution payments occur between November and January for amounts related to the previous financial year. There are also some instances where the co-contribution is paid directly into your bank account. This might happen if you:

  • retire and no longer have a super account
  • are the legal representative of a deceased account holder
  • return to work after retiring without an eligible super account.

Make the most of co-contributions when possible

If you’re eligible, Government co-contributions can add up over the long-run. If you’re considering co-contributions, it might be helpful to look into a Suncorp super account. Our transparent fees, extensive investment choice, comprehensive insurance options and easy-to-use online tools can help you build your financial future. Your superannuation is important, so before making decision such as making an arrangement to receive co-contributions or opening an account with us, we recommend that you speak to a financial adviser who can take into account your personal circumstances and objectives.

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1 Personal contributions are also called after-tax or non-concessional contributions. Contribution caps apply. Refer to Personal super contributions | Australian Taxation Office (ato.gov.au) for more information. 

Information is intended to be of a general nature only and any advice has been prepared without taking into account any person's particular objectives, financial situation or needs.

Suncorp super products are issued by Suncorp Portfolio Services Limited ABN 61 063 427 958 AFSL 237905 RSE licence number L0002059 (the Trustee), trustee for the Suncorp Master Trust ABN 98 350 952 022, RSE Fund Registration No. R1056655 (the Fund) of level 28 266 George Street Brisbane 4000. This super information is general information only and does not take into account your personal objectives, financial situation or needs. Before making a decision about whether to acquire a or continue with your Suncorp super product, you should consider whether the information is appropriate for you and read the current Suncorp super Product Disclosure Statement for your account available at suncorp.com.au/super, and speak to your financial adviser.

The Trustee and Suncorp Bank are related bodies corporate and part of the Suncorp Group. The Trustee is not responsible for, or liable in respect of, products and services provided by other Suncorp Group entities including the Suncorp Bank. Suncorp super products are not bank deposits or other bank liabilities and are subject to investment risk including possible delays in repayment and loss of the interest and principal invested. Insurance cover offered through Suncorp super products is provided by insurers who are not part of the Suncorp Group.