Self-Employed Co-contributions

Source: Australian Taxation Office

The super co-contribution helps eligible individuals save for their retirement. If you are eligible and you make a personal superannuation contribution, to your fund or Retirement Savings Account (RSA) the Australian Government will also make a contribution.

If you are self-employed, you may be eligible to receive the co-contribution from 1 July 2007.

How do I know if I am eligible?

You are eligible for a co-contribution if:

  • you make a personal superannuation contribution by 30 June of that income year to a complying superannuation fund or RSA
  • you don’t claim a deduction in your income tax return for the contribution
  • your total income is below the income threshold ($58,980 in 2007-08 financial year)
  • 10% or more of your total income is from running a business, eligible employment or a combination of both
  • you are less than 71 years old at the end of the income year, and
  • you do not hold an eligible temporary resident visa at any time during the income year.

 

You must meet all these requirements to be eligible.

How is my total income calculated?

The ATO calculate your total income by adding your assessable income and reportable fringe benefits minus business income deductions. This means that if you are self-employed and have a high turnover you may still receive a co-contribution.

The 10% Test

You can only receive the co-contribution if 10% or more of your total income is active income. Active income is income from running a business, eligible employment or a combination of both.

When the Tax Office works out what per cent of your income is active, they ignore your business income deductions. This helps self-employed people with low incomes or low profit margins.

The following table shows if your income is included in total income and if it counts as active income.

Income Source
Total Income
10% Test
Salary or wages including employment
income through a company or trust
Yes
Yes
Director fees as a company director
Yes
Yes
Investment Income
Yes
No
Income as a sole trader
Yes
(net income)
Yes
(gross income)
Partnership distribution
Yes
Yes
Distribution from a trust
Yes
No

Online Calculator

The way your super co-contribution is calculated depends on the income year in which you made your personal super contributions.

The ATO have an online Super co-contribution calculator to help you work out the co-contribution you could be eligible to receive, based on information you provide about your income and personal super contributions for the relevant income year.

To use the online calculator you must enter the amounts of your personal super contributions, employment and/or business income including partnership distribution, any reportable fringe benefit amounts, and any other income.

For individuals with business income, you must also enter the amount of business related deductions.

This information is for guidance only and is not intended as specific advice to any reader. Professional advice should be obtained before acting on any information contained herein. The publisher accepts no responsibility for loss occasioned to any person or organisation as a result of action or the refrain of action as a consequence of the contents of this publication.