I used a co-contribution calculator to find out that if I deposited $1000 of after tax income into my super account, I would get a government co-contribution of $500.
Seems like a pretty sweet deal (oh the joys of having a low income!), but how does it work?
Do I just do a bank transfer into my super fund and will the co-contribution automagically appear? or do I have to fill out a form/apply for it?
Is there anything else I need to know?
Awesome, thanks heaps for the link.
It seems pretty straightforward actually, just do a bank transfer, then lodge a tax return, then get the contribution.
Thank you again for helping me :)
haha no problems. too bad I didnt know about this during my casual work days :(
Think this decision through though if you are planning on making a voluntary contribution to your super; you won't be able to touch anything in there until retirement age (which has seen increases in the past few years).
Agree - as someone who hasn't reached half of their life expectancy, I hesitate putting money in there.
There's also so many regulation changes each year that there's no way to tell what shape or form the whole super/pension industry/laws will be like by the time I reach the ever-increasing retirement age - assuming I even make it to that age!
Note that eligibility for the age pension is different from superannuation withdrawal eligibility.
https://www.ato.gov.au/Individuals/Super/Accessing-your-supe…
The idea that super might not be the best vehicle for all your retirement savings is very valid, but skipping some free money now that will have limited impact overall on your financial position at retirement might be overly cautious.
I think the co-contribution is quite generous, and limited to a pretty low total.
If your circumstances mean you qualify and can make it without hardship, I think it is a good deal.
Note that eligibility for the age pension is different from superannuation withdrawal eligibility.
Age pension eligibility is already the same as superannuation withdrawal eligibility (if anyone "intends" to retire at age 60) for anyone who was born after 30 June 1964. I have no doubt that the "age" will continue to go higher and higher.
The problem with the co-contribution is that it sounds good on paper, however, the people who are eligible for that contribution are the low income earners who generally need their money now - not have their money locked up for another 30 or 40 years in an ever-changing system.
The TRIS or TRIP or TRAP (transition to retirement) product has recently undergone another change - most people who made use of the tax benefits of that product when it was introduced have now been advised to get out because of recent taxation changes. That's just one example of change.
Every government knows there's a sh|tload of money in the superannuation system but they're too scared to dig right into - so they tiptoe around trying to tweak little bits here and there to get a share.
Age pension eligibility is already the same as superannuation withdrawal eligibility (if anyone "intends" to retire at age 60) for anyone who was born after 30 June 1964. I have no doubt that the "age" will continue to go higher and higher.
I'm not clear on what you mean here. To get the age pension if you were born after 1967 you must wait until you are at least 67yro. You can withdraw from your super when you turn 60. When Hockey increased the pension age, he didn't increase the preservation age - although this is obviously no guarantee it won't change in the future.
The problem with the co-contribution is that it sounds good on paper, however, the people who are eligible for that contribution are the low income earners who generally need their money now
Agreed, hence my comment 'If your circumstances mean you qualify and can make it without hardship, I think it is a good deal.' There are a bunch of reasons why somebody might qualify for the co-contribution and be comfortable making a long term investment (e.g. only worked part of a year, taken time off to study etc.). I'm not recommending people make sacrifices at the age of 23 to benefit 60yro them, but the maximum permitted is only $1000, so it could quite conceivably be affordable to somebody who had a windfall, or just saved well/had low expenses.
If you want to know the details behind it, all contributions by "type" and "totals" to Super Funds for the 1 Jul to 30 Jun period get reported to the ATO before 30 Sep of that year in their MCS (Member Contribution Statement) reporting, which is part of their wider reporting obligations. Your TFN is also included in this.
The details of your tax return are matched up with the MCS (in a more complicated process of course) and if you're eligible, the ATO will forward the amount electronically to the Super fund as a co-contribution within 60 days.
its pretty detailed from here : https://www.ato.gov.au/individuals/super/in-detail/growing/s…
When you lodge a tax return, we will work out if you're eligible. If the super fund has your tax file number (TFN) we will pay it to your super account automatically.