Co-Contribution has Reduced but it’s Still Free Money
For those earning up to $60,342 pa, you get a free $1.50 from the government when you put $1of your own money into super…a 150% guaranteed return is a great deal in anyone’s book.
Well the deal still applies until 30 June. The current offer works as follows:
|
Lower income threshold |
Higher income threshold |
What will I receive for every $1 of personal super contributions? |
What is my maximum entitlement? |
|
$30,342 |
$60,342 |
$1.50 for every $1, up to a maximum co-contribution of $1,500 a year. |
Your maximum amount is $1,500. However, you must reduce this by 5c for every dollar you earn over $30,342 up to $60,342. |
You can use the ATO calculator to help you easily work out how to best maximise your contribution.
Now all this is going to change from 1st of July 2009 as the government looks to claw back some cash to assist its spending program. The matching will reduce to $1 for eligible contributions in the financial years commencing 1 July 2009 up to 30 June 2012. This reduction is only temporary and as can be seen below the offering will be back on track by 2014. Yes that’s right, 5 years!
|
Financial years |
2008/09 |
2009/10 - 2011/12 |
2012/13 - 2013/14 |
2014/15 and later |
|
Matching rate |
150% |
100% |
125% |
150% |
|
Maximum co-contribution |
$1,500 |
$1,000 |
$1,250 |
$1,500 |
So what’s the strategy?
Don’t miss this year’s co-contribution as it will be as generous as it’s going to get for the next 5 years – so put $1,000 of your own money into your super fund (or the necessary amount to maximise your entitlement).
That said, we think the scheme is a “no-brainer” going forward anyway. Try to find somewhere else you can get a guaranteed 100% return on your investment?
PS. Don’t forget, you need to lodge your tax return to get the Government co-contribution.
Any advice given is of a general nature only and has not taken into account your objectives, financial situation or needs. Because of this, before acting on any advice, you should consult a financial planner to consider how appropriate the advice is to your objectives, financial situations and needs.
