Yahoo Finance $500 cash boost that can be claimed ‘basically for free’
Low-income workers can get a $500 superannuation boost from the government.
A young Aussie has revealed how you can get a $500 cash boost from the government - and many people don’t know about it.
Under the superannuation co-contribution scheme, the government will boost eligible workers’ superannuation by $500 if they add $1,000 themselves - making it a 50 per cent return on investment.
“Why is no one talking about how the government is basically giving away $500 cash for free?” the Aussie said in a video posted online.
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“All you need to do to be eligible is, if you have a taxable income underneath $43,000 and you’re able to make a $1,000 after-tax contribution into your super, the government will basically pop in another $500 just for contributing to your super.”
The tip, which was posted by job site Youth Force, was welcome news for some Aussies, with one calling it “very helpful” and others saying they “didn’t know this”.
Here’s how the scheme works and how you can maximise your superannuation savings.
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What is the super co-contribution?
The super co-contribution is a government incentive to help people on lower- and middle-incomes boost their retirement savings.
If you earn less than $58,445 for the 2023-24 financial year and make a voluntary after-tax contribution to your super, the government will match your contributions by 50 per cent. However, to receive the maximum government contribution of $500, your income cannot exceed $43,445.
Financial adviser Helen Baker said the scheme was a “really good opportunity to boost up super”, provided you had the spare cash to make the voluntary superannuation contribution yourself.
“The concept is putting in a non-concessional contribution - so it’s not tax-deductible, it's after-tax money from your bank account,” Baker told Yahoo Finance.
The amount you are eligible to receive from the government will depend on your income and how much you contribute to your super.
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How much money can I get?
For the 2023-24 year, you need to earn less than $43,445 to be eligible to claim the maximum $500 amount.
“If you are in that range, you put $1,000 in and get $500 matched, which is a 50 per cent return on your money,” Baker said. “Where can you get a 50 per cent return on your money? Probably nowhere.”
The maximum government co-contribution you are eligible for reduces as your income increases, dropping to $0 if you earn $58,445 or more.
For example, someone earning $50,000 would be eligible for a $282 maximum co-contribution. That means they would need to contribute $564 themselves to get the benefit.
If your co-contribution is less than $20, the the government will pay the minimum amount of $20.
You can use the Australian Taxation Office’s (ATO) super co-contribution calculator to work out how much you can claim.
When should I do it?
You can take advantage of the scheme each financial year. So, if you wanted to do it for the current year, you’d need to act before June 30.
You don’t need to apply for the super co-contribution, but you will need to make a personal contribution to your super fund. The ATO says it will automatically work out if you are eligible and how much you are entitled to once you’ve lodged your tax return.
Baker recommended making your super contribution at least two weeks before June 30 to ensure it was in your account on time.
“We are still in March so, maybe people want to keep that money in their offset account keeping their mortgage down or they might have it in an account already earning 5 per cent, like a term deposit or high-interest savings account,” Baker said.
“So, maybe leaving it in there is good until it is time. Obviously, if the market moves up a lot during that time, you’d wish you’d put it into super but no one knows what the future will do.”
