Co-Contribution Eligibility Threshold

Currently, a person will be entitled to a Government Co-Contribution in respect of a tax year if they satisfy a number of conditions (including being under the age of 71 and having lodged a tax return for the relevant tax year).

In particular, the eligibility for, and the amount of the co-contribution, is affected by the amount of the total income of the taxpayer. 

If the total income exceeds a lower threshold ($30,342 for 2008/09), the amount of the co-contribution will be reduced inregard to the amount of the excess over the lower threshold.

If the total income exceeds a higher threshold ($60,342 for 2008/09), the entitlement to a co-contribution will cease entirely .

Currently the total income for this purpose is the aggregate of the assessable income of the person and their reportable fringe benefits.

A person who substitutes salary sacrifice contributions for employment income will be able to reduce their total income and therefore may be eligible for co-contribution payments.

For 2009/10 and subsequent tax years, the definition of “total income” will include the total of the salary sacrifice super contributions of the person received in the relevant tax year.

This change will be achieved by amending s8(1) of the Superannuation (Government Co-Contribution for Low  Income Earners) Act, 2003 to “add back” the value of reportable employer superannuation contributions (ie salary sacrifice contributions).