Co-contributions are a great way to save for retirement if you’re a low-income earner, as you can boost your super contributions using government dollars. 

If you meet certain criteria, you can make an after-tax contribution to your super account and the government will match what you put in – up to a limit.  

Let’s look at how this works and how you can use it as part of your retirement strategy. 

How do co-contributions work? 

When you contribute after-tax money to your super, the government contributes 50 cents for each dollar – up to a maximum of $500. 

For 2023-24, if your total income is less than $43,445, you can contribute up to $1,000 and the government will co-contribute up to $500.

If you make more than that, the government’s co-contribution will be reduced by 3.333 cents for every dollar above $43,445. 

For example, let’s say you made $35,000 total and contributed $1,000 after-tax dollars to your super. In that case, the government would co-contribute exactly $500. 

On the other hand, if you made $45,000 and contributed $1,000 after-tax dollars to your super, the government would contribute $448.18. 

The maximum income is $58,445, which means that, if you make that amount or more, you won’t qualify for any government co-contributions. 

How do I calculate my co-contribution amount? 

You can calculate the amount of your government co-contributions using the formula: 

$500 – ($0.03333 * ([Your total income] – $43,445)) 

You can also use the Australian Taxation Office’s super co-contribution calculator. 

How do I qualify?

To be eligible for government co-contributions, you must meet all the following conditions: 

• Have made at least one after-tax contribution to your super account during the past financial year 
• Have a total income of less than $54,837 
• Get 10% or more of your total income from employment or self-employment 
• Be 70 or younger at the end of the financial year 
• Have not had a temporary visa at any point during the financial year 
• Don’t exceed the government contribution cap on your after-tax super contributions
• Have had a super balance of less than $1.7 million by June 30 of the previous financial year 
• Have filed your tax return for the financial year in question 

How can I use co-contributions as part of my retirement strategy? 

If you qualify for co-contributions, adding at least $1000 in after-tax dollars to your super each year will help you grow your super to a higher retirement balance over time. And with the wonder of compound interest your balance will get a nice boost from your own, as well as the money contributed by the government. This may make your dream of an overseas holiday at retirement come true! 

Of course, there are also other ways of building up your super, including through your employer and with pre-tax salary sacrificing. Talk to one of our financial advisers if you’d like to learn more.