Super Co-Contribution

The super co-contribution is a government payment that tops up your personal super contributions. Contribute $1,000 of after-tax money to super and the government adds up to $500 - a 50 percent return the ATO pays rather than the market. The full $500 applies at lower incomes and reduces by 3.33 cents per dollar of income above the lower threshold, cutting out entirely at the higher one - $56,112 for 2024-25, updated each year. The payment lands in your super fund automatically after your tax return is processed.

The eligibility rules are narrower than the marketing suggests. Only personal contributions from after-tax money count - salary sacrifice is concessional and does not qualify, which is where most people lose the payment. You need at least 10 percent of your total income from employment or business, and you must lodge a tax return - the ATO cannot pay what the return never reports. The contribution counts against your non-concessional cap like any other personal payment.

The mechanics run through the tax return. You contribute after-tax money to your super fund during the financial year - a bank transfer, not a payroll arrangement - and lodge a tax return. The ATO checks your total income against the thresholds and pays the co-contribution into your fund automatically, usually within a few months of the return being processed. No application form exists; the return is the application.

The arithmetic is a sliding match. At or below the lower threshold - $41,112 for 2024-25 - a $1,000 contribution earns the full $500. Above it, the match reduces by 3.33 cents per dollar of income: on $45,000 the co-contribution is roughly $370, and it reaches zero at the higher threshold of $56,112. Contributing more than $1,000 does not earn more - the match caps at $500.

The qualification rules sit alongside. At least 10 percent of your total income for the year must come from employment or business, which excludes most income from investments alone. The contribution must come from after-tax money: salary sacrifice is concessional, and the scheme does not count it. The $1,000 that earns the match also counts against your non-concessional cap, so the cap check applies as usual.

For an Australian reader, the co-contribution is the highest guaranteed return in Australian finance. It matches 50 percent on the first $1,000 of after-tax contributions for lower incomes, paid by the ATO rather than the market. A part-time worker at $30,000 who contributes $1,000 has $1,500 in super by July. The payment compounds inside the fund for decades. The compound interest entry covers what that does; the non-concessional contributions entry covers the cap it counts against.

A colleague named Brent (yes, that Brent) salary sacrificed $1,000 a year on a $42,000 part-time salary for three years. He asked where his $1,500 of co-contributions went. Salary sacrifice is concessional - the scheme only counts after-tax money, and his three payments were forgone. The highest-leverage thing most Australians on lower incomes can do is contribute $1,000 from take-home pay before 30 June and lodge the return. The match is automatic only if the return reports it.