Imagine an extra $500 landing in your super fund, courtesy of the government, simply for being proactive about your financial future.

If you're a low to middle-income earner making after-tax contributions to your super without claiming a tax deduction, you could be eligible for this often-forgotten-about super boost. Here’s how it works.

How does the super co-contribution scheme work?

The superannuation co-contribution scheme is a government initiative aiming to assist low to middle-income earners save for their retirement.

What that means is, depending on the amount of income you earn each year, the government may add to your super when you make a voluntary after-tax contribution, which you don’t claim a tax deduction for. The amount you receive will depend on how much you contribute as well as your income.

Are you eligible for a super co-contribution?

To be eligible for a super co-contribution from the government, generally you must:

• make an after-tax contribution to your super fund, which you don’t claim a tax deduction for


• lodge your annual tax return for the relevant year


• have a total income that’s less than $60,400 in the 2024/25 financial year for at least a part co-contribution (more info on this below)


• receive 10% or more of your income from eligible employment and/or running a business


• be less than 71 years old at the end of the financial year that you’re making the contribution


• have a total super balance below $1.9 million as at 30 June of the financial year prior to the year that you’re contributing


• not have exceeded your non-concessional contributions cap for the year


• not have held a temporary visa at any time during the financial year (unless you’re a New Zealand citizen, or it was a prescribed visa)

 

What do you need to do to get the super co-contribution?

Provide your tax file number to your super fund

You don’t need to apply for the super co-contribution, but you will need to make sure you’ve provided your tax file number to your super fund. Generally, your super fund can’t accept after-tax contributions, or receive co-contributions on your behalf, if you haven’t provided your tax file number.

Lodge your tax return

You’ll need to lodge your annual tax return for the relevant year. The Australian Taxation Office (ATO) will then use the information provided in your tax return and the contribution information from your super fund to work out your eligibility.

If you’re eligible, the ATO will automatically calculate the appropriate amount that’s owing to you and will typically deposit this into the super fund which you have made the contribution. If you’ve recently retired and have closed your super account, it may be possible to have your co-contribution paid to you directly.

How much will the super co-contribution be?

If your total income is equal to or less than $45,400 in the 2024/25 financial year and you make after-tax contributions of $1,000 to your super fund, you’ll receive the maximum co-contribution of $500.

If your total income is between $45,400 and $60,400 in the 2024/25 financial year your maximum entitlement will reduce progressively as your income rises.

If your income is equal to or greater than the higher income threshold of $60,400 in the 2024/25 financial year, you won’t receive any co-contribution. You can use the ATO’s co-contribution calculator to estimate your entitlement and eligibility.

What counts towards your total income?

Your total income for this purpose includes your assessable income, reportable super contributions and any reportable fringe benefits, less any amounts you’re entitled to claim as a tax deduction for running your own business.

Reportable fringe benefits typically arise where non-cash benefits are provided to you by your employer, such as a company car or lease vehicle.

Are there other things you should be across?

• The income thresholds mentioned above are indexed each year in line with increases in average weekly earnings and may change in future financial years.


• If you exceed concessional and non-concessional super contribution caps, additional tax and penalties may apply.


• The value of your investment in super can go up and down, so before making extra contributions, make sure you understand, and are comfortable with, any potential risks.


• The government sets general rules around when you can access your super, which typically won’t be until you reach your preservation age of 60 years old and meet a condition of release, such as retirement.

If your partner is earning a low income, working part-time, or currently unemployed, boosting their super could be a smart financial move for both of you.

When your partner isn’t earning much, or is out of work, their super might not be growing enough to support them in retirement. By contributing to their super, you may not only help them but also enjoy some tax benefits yourself.

Here, we’ll explore how the spouse contributions tax offset works and how it differs from contribution splitting.

The spouse contributions tax offset

Are you eligible?

To be entitled to the spouse contributions tax offset:

• You need to make a non-concessional contribution to your spouse’s super. This means you add money from your after-tax income and don’t claim a tax deduction for it.


• You must be married or in a de facto relationship together, and are not living apart or separately.


• You must both be Australian residents.


• Your spouse’s income should be $37,000 or less for the full tax offset, and under $40,000 for a partial tax offset.


• Your spouse is under 75 years of age, and their total superannuation balance is less than the general transfer balance cap ($1,900,000 for 2024-25) as at 30 June of the prior year.

 

What are the financial benefits?

If eligible, you can generally make a contribution to your spouse’s super fund and claim an 18% tax offset on up to $3,000 through your tax return.

To be eligible for the maximum tax offset, which works out to be $540, you need to contribute a minimum of $3,000 and your partner’s annual income needs to be $37,000 or less. If their income exceeds $37,000, you’re still eligible for a partial offset. However, once their income reaches $40,000, you’ll no longer be eligible for any offset, but can still make contributions on their behalf.

Are there limits to what can be contributed?

You can’t contribute more than your partner’s non-concessional contributions cap, which is $120,000 per year for everyone, noting any non-concessional contributions your partner may have already made.

However, if your partner is under 75 and eligible, they (or you) may be able to make up to three years of non-concessional contributions in a single income year, under bring-forward rules, which would allow a maximum contribution of up to $360,000.

Another thing to be aware of is that non-concessional contributions can’t be made once someone’s super balance reaches $1.9 million or above as at 30 June 2024. So you won’t be able to make a spouse contribution if your partner’s balance reaches that amount. There are also restrictions on the ability to trigger bring-forward rules for certain people with large super balances (more than $1.66 million in 2024-25).

There are also different super balance limits in place if you want to take advantage of the bring-forward rules. See our page on super bring-forward rules to find out more.

How contributions splitting differs

Another way to increase your partner’s super is by splitting up to 85% of your concessional super contributions with them, which you either made or received in the previous financial year. Concessional super contributions can include employer and or salary-sacrifice contributions, as well as voluntary contributions you may have claimed a tax deduction for.

What rules apply for contribution splitting?

To be eligible for contributions splitting, your partner must be between age 60 (preservation age) and 65 (and not retired).

Are there limits to how much can be contributed?

Amounts you split from your super into your partner’s super will count toward your concessional contributions cap, which is $30,000 per year for everyone.

On top of this, unused cap amounts accrued in the last 5 years can also be contributed, if they’re eligible. Note, this broadly applies to people whose total super balance was less than $500,000 on 30 June of the previous financial year.

Do all super funds allow for this type of arrangement?

You’ll need to talk to your super fund to find out whether it offers contributions splitting, and it’s also worth asking whether there are any fees. If you have an AMP super account and would like to set contribution splitting with your partner up, mail or email this form to us.

What else you and your partner should know

If either of you exceeds super contribution caps, additional tax and penalties may apply.

The value of your partner’s investment in super, like yours, can go up and down, so before making contributions, make sure you both understand any potential risks.

The government sets rules about when you can access your super. Generally, you can access it when you’ve reached age 60 (preservation age) and retire.

While you can’t personally make further non-concessional contributions into your super once you have a total super balance of $1.9 million or above (as at 30 June of the previous financial year), it’s still possible to make contributions to your partner’s super (noting the caps).

Where to go for more information

Your individual circumstances will significantly influence the best course of action. Given the complexity of the rules around spouse contributions and contribution splitting, it’s important to ensure you and your partner take the right approach. Speak to us if you’d like to explore the options and understand what strategy may be most suitable for you both.

Next Steps

To find out more about how a financial adviser can help, speak to us to get you moving in the right direction.

 

Important information and disclaimer

The information provided in this document is general information only and does not constitute personal advice. It has been prepared without taking into account any of your individual objectives, financial solutions or needs. Before acting on this information you should consider its appropriateness, having regard to your own objectives, financial situation and needs. You should read the relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser. From time to time we may send you informative updates and details of the range of services we can provide.

FinPeak Advisers ABN 20 412 206 738 is a Corporate Authorised Representative No. 1249766 of Spark Advisers Australia Pty Ltd ABN 34 122 486 935 AFSL No. 458254 (a subsidiary of Spark FG ABN 15 621 553 786)