Government super contributions

Bonus super contributions from the government

If you are a low income earner, you may be eligible for bonus super contributions from the government. Here we explain the extra contributions you could be entitled to and how they are paid into your super.

Bonus super contributions for low income earners

If you are on a low income it can be harder to save for retirement. To make it easier, the government has two types of bonus super contributions to help you grow your super.

The low income super tax offset helps those earning less than $37,000 a year. You don't have to make extra any super contributions yourself to get this.

The government co-contribution helps people that earn less than $52,697 a year and make extra super contributions.

Low income super tax offset (LISTO)

The low income super tax offset compensates you for the tax you pay on concessional (before tax) contributions. Concessional contributions include your employer contributions, salary sacrificed super contributions and personal contributions you've claimed a tax deduction for.

If you earn $37,000 a year or less, and are eligible, the government will make an extra contribution to your super, equal to 15% of your concessional contributions, up to $500 annually. This means that most low income earners will not pay any tax on super contributions.

You don't need to do anything, the ATO will work out your eligibility and pay your low income super tax offset directly into your super account. Make sure your super fund has your tax file number so you don't miss out on the payment.

For more information, see the ATO's information on the low income super tax offset.

Case study: Ewan gets a low income super tax offset from the government

Young man

Ewan, 26, earns $36,000 a year from his job as a personal trainer. Over the last financial year Ewan's employer put $3,420 into his super account.

Because Ewan provided his tax file number to his super fund the ATO works out he is eligible for a low income super tax offset from the government. After Ewan lodges his tax return the government adds $500 to his super account.

Government co-contributions

The government co-contribution scheme rewards you for making personal non-concessional (after tax) contributions. If you earn less than $52,697 per year (before tax) and make non-concessional super contributions, you may be eligible for a matching contribution from the government, known as a government co-contribution.

If you earn less than $37,697 the maximum co-contribution is $500 based on 50c from the government for every $1 you contribute. It doesn't matter whether you make small regular contributions or irregular lump sums, the co-contribution is based on the total amount of non-concessional contributions you make over a financial year.

The amount of co-contribution you are eligible for reduces the more you earn,  however, you can earn up to $52,697 and still be eligible for something.

How do I get the government co-contribution?

To receive the co-contribution you will need to lodge a tax return for the year.

The government will then work out how much you are entitled to. If you're eligible, the government will pay the co-contribution directly to your fund. See the ATO for more details on super co-contributions.

Case study: Jay gets a co-contribution from the government

Super decisionJay, 26, earns $28,000 a year from his part-time job. He decides to grow his super by contributing an extra $40 per fortnight into his super fund. This small regular step will grow Jay's super significantly over time. By making personal contributions he qualifies for a super co-contribution from the government.

By the time Jay retires at 65, these additional amounts will have boosted his super by an estimated $90,000.

How to optimise your super contributions

To help you work out the best way for you to grow your nest egg, we've developed a super contributions optimiser. It helps you decide whether it's better for you to make before or after tax contributions, or a combination of both.

Find out the best way to add to your super.

Super contributions optimiser

Unpaid super? How to check your employer super contributions

Make sure you're getting the super you're entitled to. Your employer must transfer super to your super fund at least once a quarter, although they can choose to transfer super more often. Check you are receiving the correct amount of super by logging into your online super account, contacting your super fund or logging into your myGov account.

If you think you're not getting paid the correct amount of super talk to your employer. Ask how often they're paying your super, which fund they're paying it to and how much they're paying.

If your employer is not paying your super at all or not paying you enough super you should report it to the ATO.

If you're a low income earner it can be harder to grow your super. The low income super tax offset and the government co-contribution help to boost your super balance so you'll have  more money to live on in retirement.

Related links

Last updated: 24 Oct 2018