Turbocharge your super with the Government co-contribution
Putting extra into your super might not be at the top of your to-do list at tax time. But with the Government’s co-contribution scheme, you can get a boost of up to 50 cents for every $1 you voluntarily contribute to your super up to a maximum of $500.
That’s money from the Government paid directly into your super.
In this article, you’ll find out how the Government co-contribution, combined with the power of compound interest, can turbocharge your retirement saving.
How it works
If you’re an eligible low or middle-income earner, the Government will contribute up to 50 cents for every $1 you voluntarily put into your super – up to a maximum of $500 a year.
Here’s an example of how it works:
Declan — a 19-year-old mechanic — earns $37,000 per year before tax. As part of his super guarantee, Declan’s employer pays $3,515 into his MTAA Super account. Towards the end of the financial year, Declan voluntarily puts an extra $1,000 into his super and the government co-contributes an additional $500 after Declan submits his tax return.
This additional $1,500 means Declan has $5,015 added to his super for the financial year. That’s 43 per cent more than if he relied only on his employer’s contributions.
Am I eligible?
To receive the full Government co-contribution, you must:
be under the age of 71 at the end of June 2019
earn less than $37,697 per year before tax
earn at least 10% of your total income from employment or running a business (or both)
be a permanent resident of Australia
lodge an income tax return for the 2018/19 financial year.
Any additional contributions you make to your super can make a big difference to how much money you have in retirement.
This is because super works on the principle of compound interest. The money you put in super is invested on your behalf in things like shares, infrastructure, and bonds. The returns on these investments are then reinvested back into your super, helping it grow and earn more. So, the sooner you put money into super, the more time it has to grow and the more you will have when you retire.
Putting an extra $1,000 dollar a year into super might feel like a lot, but it’s only $20 a week. This means even small changes to your lifestyle can help you save.
To save $1,000 to take full advantage of the Government co-contribution, you could:
take your lunch from home twice a week
give up five bought coffees a week
wash your car at home every fortnight instead of using a car wash
take public transport to work twice a week
Industry Super Funds’ Find extra money for super calculator is a great way to see where you can find extra money for your super and how much the Government will co-contribute if you reach your contribution goals.
Remember, you don’t have to contribute the maximum $1,000 to take advantage of the co-contribution scheme. Any money you can spare will receive all the same benefits.
Super tip: Using ASIC’s free TrackMySPEND app is a great way to track where you’re currently spending money and find money to contribute to super and other savings.
Get the super ball rolling now
To claim the Government co-contribution, simply:
Make a voluntary after-tax contribution into your super account by 30 June 2019. MTAA Super members can do this online via Member SuperSite (BPAY/EFT), or fill in a Voluntary Contribution form (cheque/money order).
Lodge your tax return for the 2018/19 financial year.
Wait for the Australian Taxation Office to deposit a co-contribution directly into your super account in the following financial year.
Remember! Your contribution must be received by 30 June 2019 to claim the Government co-contribution for the 2018/19 financial year.
To learn more about making extra contributions, you can meet face-to-face with one of our dedicated Superannuation Advisers or talk to our Financial Education and Advice Team on 1300 362 415.
As a member of MTAA Super, simple advice is available to you at no additional cost – it’s all covered by your MTAA Super administration fees. So, get in touch. We’re here to help.
General Advice Warning
This information on this website is provided by Motor Trades Association of Australia Superannuation Fund Pty Ltd (ABN 14 008 650 628, AFSL 238 718) of Level 3, 39 Brisbane Avenue BARTON ACT 2600, Trustee of the MTAA Superannuation Fund (ABN 74 559 365 913). Motor Trades Association of Australia Superannuation Fund Pty Ltd has ownership interests in Industry Super Holdings Pty Ltd and Members Equity Bank Limited (ABN 56 070 88 7 679).
The information contained in this website is correct at the time of publishing. It is of a general nature and does not take into account your objectives, financial situation or needs. Before acting on any of the information you should consider its appropriateness, having regard to your own objectives, financial situation and needs. If you are considering acquiring or continuing to hold a particular financial product, you should obtain the Product Disclosure Statement relating to the product and consider it before making any decision. The MTAA Super Product Disclosure Statement is available on this website, or by telephoning the Customer Service Centre on 1300 362 415.
MTAA Super recommends that potential investors seek independent financial and taxation advice before making any investment decisions so as to determine whether an investment is appropriate, given the investor’s investment objectives, financial position and needs.
Note: Superannuation Advisers are employees and authorised representatives of Motor Trades Association of Australia Superannuation Fund Pty. Limited ABN 14 008 650 628, AFSL 238 718 (Trustee). The Trustee will be responsible for any General Advice about superannuation provided by the Superannuation Advisers. Superannuation Advisers are also authorised representatives of Link Advice Pty Ltd (ABN 36 105 811 836 AFSL 258 145). Link Advice will be responsible for any Personal Advice provided by the Superannuation Advisers. Advisers in the Financial Education and Advice Team (FEAT) are employed by Link Advice Pty Ltd (ABN 36 105 811 836 AFSL 258 145). Link Advice will be responsible for all General and Personal Advice provided by advisers in the FEAT team.
1 Calculations made using the Contribution Optimiser Calculator are based on a 19-year old person putting an additional $1,000 each year into a savings account assuming 5.7% investment return (after investments, taxes and fees) over 47 years. The figures provided by the calculator are projections only and may not actually occur. These projections are based on a series of assumptions, including that all contributions can be saved without additional tax or fees. They do not take your personal circumstances into account and are not intended to be a substitute for professional advice. Inflation is assumed at 2% per year and salary growth is assumed at 3% per year.