It may not be as generous as it once was, but the numbers still add up for the Government co-contribution – which is effectively a free hit for your super if you earn less than $51,813 p.a.

If you’re a low or middle-income earner and make personal (after-tax) contributions to your super fund, the government also makes a contribution (called a co-contribution) up to a maximum amount of $500.

Who can get it?

In 2017/18, the people who stand to gain most from the co-contribution are those who will earn less than $36,813 this financial year.

If that’s you, you can receive the maximum $500 co-contribution by making a $1,000 after-tax contribution to your super before 30 June 2018. After-tax contributions are those that come from you and not your employer, so salary sacrifice contributions don’t count.

If you earn more than $36,813 and less than $51,813, you can still receive some co-contribution, but the amount you receive decreases on a sliding scale.

To be eligible, you need to be earning at least 10% of your income from employment. If you’re retired and earning only income from investments, you are not eligible for the co-contribution.

What difference will it make?

The fact remains that many people need to boost their super to achieve a comfortable retirement, so any additional assistance is a great help.

It’s also worth remembering that it’s not all about the free money. The combination of your additional contributions and the bonus contributions means your super is growing at a much faster rate.

Case study

Ingrid is age 45 and earns $30,000 p.a. working part-time. Her current superannuation balance is $50,000. If Ingrid relies only on her employer’s Superannuation Guarantee (SG) payments, $2,850 will be added to her super balance this financial year. If Ingrid makes a $1,000 after-tax contribution before 30 June 2018, she will be eligible for the maximum $500 Government co-contribution.

Important tips

You need to lodge your tax return to receive the Government co-contribution. If someone is doing this for you on your behalf (such as your accountant), be sure to notify them so it is elected on your tax return. Co-contributions are usually processed in February the following year.

Many super funds have electronic cut-off dates well before 30 June so be sure not to leave any important super contributions to the last minute.