2009 Budget – Government co-contribution reduction
Written on 18th March, 2009
Temporary reduction of the Government co-contribution from 1 July 2009 to 30 June 2014
The Government will temporarily reduce the matching rate and maximum co-contribution that is payable on an individual’s eligible personal non-concessional superannuation contributions, with effect from 1 July 2009.
Under this measure, the matching rate and corresponding reduction will be:
|
2009-
2010
|
2010-
2011
|
2011-
2012
|
2012-
2013
|
2013-
2014
|
2014-
2015
|
|
|
Maximum
co-contribution
payable
|
$1000
|
$1000
|
$1000
|
$1250
|
$1250
|
$1500
|
|
Reduction for
each $1 of total
income above
shade out
threshold
|
3.333
cents
|
3.333
cents
|
3.333
cents
|
4.167
cents
|
4.167
cents
|
5 cents
|
Co-contribution eligibility
|
Super contribution ($ pa)
|
||||
|
1000
|
750
|
500
|
250
|
|
|
Income
($ pa )*
|
Government co-contribution ($ pa)
|
|||
|
30,342
|
1000.00
|
750.00
|
500.00
|
250.00
|
|
32,342
|
933.34
|
750.00
|
500.00
|
250.00
|
|
34,342
|
866.68
|
750.00
|
500.00
|
250.00
|
|
36,342
|
800.02
|
750.00
|
500.00
|
250.00
|
|
38,342
|
733.36
|
733.36
|
500.00
|
250.00
|
|
40,342
|
666.70
|
666.70
|
500.00
|
250.00
|
|
42,342
|
600.04
|
600.04
|
500.00
|
250.00
|
|
44,342
|
533.38
|
533.38
|
500.00
|
250.00
|
|
46,342
|
466.72
|
466.72
|
466.72
|
250.00
|
|
48,342
|
400.06
|
400.06
|
400.06
|
250.00
|
|
50,342
|
333.40
|
333.40
|
333.40
|
250.00
|
|
52,342
|
266.74
|
266.74
|
266.74
|
250.00
|
|
54,342
|
200.08
|
200.08
|
200.08
|
200.08
|
|
56,342
|
133.42
|
133.42
|
133.42
|
133.42
|
|
58,342
|
66.76
|
66.76
|
66.76
|
66.76
|
|
60,342
|
0.00
|
0.00
|
0.00
|
0.00
|
Oculus Comment
Clients may need to consider making additional contributions – whether nonconcessional or concessional – to top up their superannuation to maintain net contributions at 2008-2009 levels.
The co-contribution is still an extremely attractive scheme despite the reduction of the multiplier. For example, a client whose income is $40,000 with $1,000 of pre-tax income ($685 post-tax at a marginal tax rate of 31.5%) to contribute to super would be eligible for a co-contribution of $678, providing them with total net super contributions of $1,363. If the same $1,000 was salary sacrificed to super, their net super contributions would be $850.
No change was announced to the lower and upper income thresholds for cocontribution eligibility. The 2008-2009 shade out threshold is $30,342 with no cocontribution payable if total income exceeds $60,342. The indexed thresholds are yet to be set for the 2009-2010 year.
