The scheme was set up by the Federal Government in order to encourage residents to save up for their retirement.
Can you Receive Government Co-Contributions? If you make under a certain amount of money each year, the government will match any amount that you contribute to your SMSF, but there is a threshold.
This does not include the mandatory 9 per cent superannuation contribution that your employer makes to your fund.
You will need to make your personal contributions before the 30th of June to your super fund and you cannot claim this contribution as a deduction in that financial year's tax return.
Here are some of the additional criteria that must be met to attain the superannuation co-contributions from the Australian Government: •You must make less than $60,342 per year •At least 10 per cent of your income must derive from either approved employment or self employment, or a combination of the two •You must be younger than 71 before the end of the current financial year •You also may not be permitted to carry a temporary resident visa during any time of the year, unless you are a New Zealand resident How Much Will you Receive? The amount that the government contributes depends on your salary.
For example, with an income of $30,342, the government will match every dollar that you contribute up to $1,000.
This is the maximum contributions rate from now until 2012, but this rate is expected to rise in 2013 and 2014 to $1,250 and to at least $1,500 in subsequent financial years.
Since the maximum eligible income is $60,342 for the 2009-10 financial year, the amount matched is reduced by five cents for every dollar contributed, until you reach the highest bracket.
Applying for a Government Co-Contribution You can apply for government co-contributions through your superannuation provider and they will do all of the paperwork that is necessary for you to submit an application.
They will also determine how much money will be contributed to your account, based on your personal contributions and income.
This will be stated on your SMSF annual accounts and the government contribution will then be automatically added to your SMSF.
It is rather easy to apply for government co-contributions as all you must do is turn in your personal income tax return and make a contribution to your SMSF.