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It pays to belong

TM

Key Focus ►► Do you want a 100% return on your investment? ►► Are you eligible for a $1,000 bonus from the Government every year? ►► Do you want more to spend in retirement? ►► Are you retired but still working casually?

Catholic Super | 1300 655 002 | www.csf.com.au | info@csf.com.au Copyright CSF PTY Limited (ABN 30 006 169 286) trustee of Catholic Super (ABN 50 237 896 957) ©2008

Fact Sheet Super Co-contribution 2010/11 The Super Co-contribution is a payment made by the Government into your super account to encourage you to save for retirement. The Government can contribute a maximum of $1 for each $1 you contribute, based on your assessable income in the financial year - that’s 100% return on your investment!

1 July 2010 Page 1


Super Co-contribution - Fact Sheet

What is the Super Co-contribution? You could be eligible to receive up to $1,000 tax-free from the Government to top up your super. If you earn less than $61,920* year and you make an after-tax voluntary contribution to your super, you could be eligible to receive a bonus through the Super Cocontribution Scheme. To receive a Super Co-contribution you: ●●

have to make voluntary, after-tax contributions during the financial year;

●●

have a total annual income less than $61,920*;

●●

are under 71 years old at the end of the financial year;

●●

have to be an Australian resident;

●●

lodged an income tax return for the financial year;

●●

have not held an eligible temporary resident visa at any time during the financial year;

●●

earned at least 10% of your total income from running a business or from an employer or a combination of both.

* since 01/07/2009, income includes salary sacrifice contributions

The following table can be used as a guide to estimate your Super Co-contribution entitlement: Annual Income

Maximum Co-contribution

Required After Tax Contribution

$31,920

$1,000

$1,000

$36,920

$834

$834

$41,920

$667

$667

$46,920

$500

$500

$51,920

$333

$333

$56,920

$168

$168

$61,920

$0

$0

►► Temporarily reducing the co-contribution There is a temporary reduction in the co-contribution matching rate for after tax contributions made in the five years from the 2009-10 year through to the 2013-14 financial year. Contribution Year

Matching rate %

Maximum Cocontribution

2009 - 2010

100

$1,000

2010 - 2011

100

$1,000

2011 - 2012

100

$1,000

►► How much will I receive?

2012 - 2013

125

$1,250

The Government could pay you up to $1 for every dollar of your own money you pay into super.

2013 - 2014

125

$1,250

2014 - 2015

150

$1,500

For the 2010/2011 financial year, if your income is: ●●

Less than $31,920 per year, you could be entitled to the maximum co-contribution of $1,000;

●●

Above $31,920, the maximum co-contribution will reduce by five cents for each additional dollar of income and phase out completely at $61,920.

►► What else do I need to know? Your personal contribution and the Super Co-contribution: ●●

cannot be accessed until your retirement;

●●

will not be subject to any tax when paid into super;

●●

will not be taxed as an ‘end-benefit’.

Catholic Super | 1300 655 002 | www.csf.com.au | info@csf.com.au Copyright CSF PTY Limited (ABN 30 006 169 286) trustee of Catholic Super (ABN 50 237 896 957) ©2008

Despite last year’s Budget announcement that the co-contribution would return to previously higher levels after the temporary reduction, the latest Budget proposes that the matching rate for the superannuation co-contribution will be permanently retained at 100% up to an annual maximum contribution of $1,000. The Government also proposed freezing the indexation applied to the income threshold above which the maximum superannuation co-contribution begins to phase down for 2010/11 and 2011/12. These two proposals have not yet been passed into legislation

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Super Co-contribution - Fact Sheet

►► What else do I need to know? You do not have to contribute the maximum amount, nor do you have to make your contribution in one payment. You can make smaller payments throughout the year and still be eligible for a matching contribution. Some contributions do not qualify for the co-contribution. These include employer contributions, salary sacrifice contributions, any contributions you have claimed as a tax deduction, rollovers from other super funds and transfers from overseas super funds. Self-employed people are also eligible to receive the super co-contribution (additional conditions apply).

What do I have to do now? Your contribution can be made in one of the following ways: 1.

Arrange for a monthly direct debit from your bank account to your Catholic Super account

2.

Your employer may be willing to deduct the money from your salary

3.

BPAY (you will need our biller code and your unique reference number - call us or log onto Member Online to get this)

4.

Cheque (made payable to Catholic Super) together with personal contribution form

To ensure you qualify you need to make an after-tax contribution to your super fund before the end of the current financial year and lodge your tax return. If you are eligible, the Australian Tax Office (ATO) will send your entitlement to your super fund and it will be credited to your superannuation account – you will receive confirmation from the ATO when this is done.

Let’s look at some examples Case study 1 Kate is 30 years of age and has just left full time employment to start a family. She plans to work on a casual or part time basis over the next 10 years earning around $15,000 a year. She would like to continue contributing to super during this time. How can she benefit from this? If Kate makes a $1,000 after tax contribution in each of the 10 years, the Government will match Kate’s contribution $1 for $1 into her nominated superannuation account. Over this 10 year period, Kate will contribute $10,000 and the Government will contribute $13,000. With compound interest of 8% after fees and taxes and assuming Kate retires at age 65, her initial $10,000 investment will be worth an extra $182,000 at retirement! Case study 2 Jack is 15 years of age and has just started his first part time job at the local supermarket. Jack plans to work on a casual or part time basis over the next 8 years as he completes his secondary and tertiary studies. Jack’s parents would like to help him get a kick along in superannuation and decide to make a $1,000 contribution into his superannuation account each year Jack works. As a result of the after tax $1000 contribution made in to Jack’s account for eight years, he will receive the Government co-contribution for each of those years. Under the current rules, Jack will contribute $8,000 and the Government will contribute $10,000. With compound interest of 8% after fees and taxes, Jack will already have around $30,000 in superannuation before he even embarks on his chosen career post tertiary education! Even better, this $30,000 will be worth over $640,000 when Jack turns 65 and this doesn’t even include the contributions he will be making over this time. Hopefully, Jack will someday appreciate Mum and Dad’s foresight.

Catholic Super | 1300 655 002 | www.csf.com.au | info@csf.com.au Copyright CSF PTY Limited (ABN 30 006 169 286) trustee of Catholic Super (ABN 50 237 896 957) ©2008

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Super Co-contribution - Fact Sheet

What to do ►► Check that you qualify for a co-contribution ►► Go go our Super Co-contribution calculator on our website www.csf.com.au ►► Make a payment to your Catholic Super account before the end of the financial year ►► Seek advice from a financial planner

Other related fact sheets ►► Superannuation (general) ►► Salary Sacrifice

Catholic Super | 1300 655 002 | www.csf.com.au | info@csf.com.au Copyright CSF PTY Limited (ABN 30 006 169 286) trustee of Catholic Super (ABN 50 237 896 957) ©2008

1 July 2010 Page 4

Salary Sacrifice factsheet  

Get the facts about salary sacrifice contributions

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