Government co-contributions give a helping hand

If money's tight, we might not be able to save as much as we’d want to for our retirement. The Australian Government’s co-contribution scheme gives an annual super boost of up to $500 to eligible low and middle-income earners.

Give me the main points

• To be eligible, you must have an annual income of less than $51,021.
• There are other conditions - we'll get to those in a moment.
• Half a million Australians received the Government co-contribution in 2014-15. ¹
• Best of all, you don't even have to apply. Just file your annual tax return and it’s done for you.

Get set up for the future

Setting up salary sacrifice is normally a straightforward process: you’ll just need to arrange with your employer to have them pay some of your pre-tax income straight into your super fund, which you can access when you retire. The benefits of contributing extra to your super from your pre-tax pay include easier budgeting as the money never goes into your bank account so you won't miss it and you can get a capped tax rate of 15%¹ on the 'sacrificed' income.

If you're serious about getting your super up to speed, then depending on your circumstances, salary sacrifice is an effective strategy to maximise your super contributions and lower your taxable income.

¹ If you have income and concessional super contributions of more than $300,000 in the 2016/17 financial year, the salary amount sacrificed may attract an additional 15% tax. It was proposed in the 2016 Federal Budget the income threshold will be lowered $250,000 in the 2017/18 financial year and onwards.

² ATO 2016, found at: https://www.ato.gov.au/printfriendly.aspx?url=/Business/Super-for-employers/In-detail/Salary-sacrifice/Salary-sacrificing-super---information-for-employers/. These figures are based on ATO Comprehensive tax calculator 2015 for the 2014-15 income year, calculated by applying 15% income tax, the Medicare levy and the low income tax offset.

³ Money Smart 2016, found at: https://www.moneysmart.gov.au/superannuation-and-retirement/how-super-works/super-contributions/contributing-extra-to-super