With the benefit soon to reduce, time is running out to make the most of the super co-contribution.
Government superannuation co-contribution for low and middle income earners will be halved from July 2012.
These important changes mean that the lead up to 30 June, 2012 will be the last opportunity many members of a fund have to use the benefit.
Under the current rules, for members with income of $31,920 or less, the government will match super contributions dollar for dollar, up to a maximum of $1,000.
The government will only match personal non-concessional (after tax ) contributions, they will not match concessional contributions, such as super guarantee payments or deducted contributions.
Once income exceeds $31,920 the co-contribution tapers off until income reaches $61,920 when the benefit cuts out altogether.
Under the proposed new rules, which take effect at the start of the new financial year, the government co-contribution will be cut to 50 cents for each dollar contributed by the fund member. The co-contribution will cut out when income reaches $46,920.
To be eligible to receive government superannuation co-contribution fund members must be under 71 years of age at the end of the financial year, and they must earn 10% or more of their income from carrying on a business, being in eligible employment or a combination of the two.
Co-contribution is not subject to contributions tax when it is paid to the member’s fund. It is not taken in as income in the member’s personal tax return.
It is to be noted, members over 65 years of age to be eligible to make contributions to a fund must meet the work test which is made by working at least 40 hours in a period of not more than 30 consecutive days in the financial year.
For further information please contact our office on 02 9299 7044 for advice.