With recent events across the globe emphasising the volatility of the international financial market it is perhaps some timely advice that consumers make a move to not just focus on the immediate effects of the current downturn. It is important that, in times such as these, that we continue to also look to the future in an attempt to make personal financial decisions that will have a long-lasting impact and can potentially secure our financial future.
One area in particular that taxpayers should be considering, and that can potentially make tens of thousands dollars difference in numerous years time, is superannuation. By taking full advantage of the Government’s Superannuation Co-contribution initiative Australian taxpayers can be proactive in securing their financial future.
Changes to the co-contribution eligibility criteria will see even more taxpayers able to receive the benefits of the scheme, even if they were not eligible prior to 1 July 2007.
In broad terms, you are eligible to receive the Government superannuation co-contribution if:
• you make personal, after-tax contributions to a compliant super find or retirement savings account (RSA) by 30 June each financial year;
• you have a total annual income of less than $60,342, which is indexed annually;
• 10% or more of your total annual income is from eligible employment, running a business or a combination of both;
• you are less than 71 years old at the end of the relevant income year;
• you do not hold a temporary resident visa; and
• you lodge an income tax return in the relevant financial year.
After 1 July 2007, the criterion has been changed such that self-employed sole traders and partners in a partnership may now be eligible to receive the co-contribution from the Government. Additionally, you must provide your tax file number to your super fund in order to receive the co-contribution and both the low and high income thresholds will be indexed annually in order to accurately reflect national changes in average wages prices.
Currently, the maximum income threshold that is required in order to qualify for the Government co-contribution is indexed at $60,342.
Total income is defined by salary and wages and net business income as well as interest, rent and dividends and reportable fringe benefits and as a result to may not be the same as our taxable income amount.
An additional benefit for taxpayers that makes the co-contribution scheme even more appealing, is that there is no application process required. So long as you make personal, after-tax contributions to your super fund or RSA before 30 June and lodge your income tax return you will receive your required amount of co-contribution, provided that you meet the other criteria items.
Your super fund report will report the amount of your personal contributions to the tax office and upon the lodgment of your annual tax return your eligible co-contribution amount will be calculated and credited to your super fund. It is important to be aware that if you fail to provide your fund with your tax file number then personal contributions will and cannot be accepted and you could forfeit any co-contribution eligibility as a result.
Superannuation co-contributions are just one way that taxpayers can actively take steps to ensure financial security for their future. At The Quinn Group, our team of expert accountants can provide you with a range of individually tailored financial strategies that can help you to create a secure financial future for you and your loved ones. If you would like more information on making the most of your super fund or for advice on any other accounting or financial matter you can contact us by calling 1300 QUINNS or click here to submit an online enquiry.