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Super

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I'm new

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If you work for yourself can you put money into super and does the government match it?
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Taxicorn

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@Corinne1 

 

Yes you can put money into super if you work for yourself up to $100,000 per year if under 65.

 

The government will only 'co-contribute' as per Super Co-contribution

Based on your income level and upto a maximum of $500 (only if you don't claim it as a tax deduction).

 

 

 

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Best answer

ATO Certified

Taxicorn

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@Corinne1 

 

Yes you can put money into super if you work for yourself up to $100,000 per year if under 65.

 

The government will only 'co-contribute' as per Super Co-contribution

Based on your income level and upto a maximum of $500 (only if you don't claim it as a tax deduction).

 

 

 

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Devotee

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Hi Corinne1

 

As macfanboy says, you can make personal contributions into super and receive a government co-contribution if you meet the eligibility criteria.

 

At least 10% of your income has to be employment or business income.

 

You have to be earning less than $38,654 (in 2019-20) to be eligible for the maximum $500 co-contribution - for a $1,000 contribution made by you. ie the government pays 50 cents for every $1 contributed by you.

 

If you're earning between $38,654 and $53,564 you'll be eligible for a lower co-contribution amount. Eg if you're exactly half way between these two income amounts you'll be eligible for a $250 government contribution - for a $500 contribution made by you.

 

Besides the co-contribution you can also make a personal contribution to super and claim a tax deduction for it. The super fund will then deduct 15% tax from the contribution but you'll receive a refund at your marginal tax rate.

 

Working through some numbers. Let's say you're earning $46,154 - exactly half way between $38,654 and $53,564. You contribute $1,500 to super. For the first $500 you want the government co-contribution. For the remaining $1,000 you tell your fund that you intend to claim a tax deduction for that amount in your income tax return.

 

In your super account you initially have $1,350. That's the $500 personal non-concessional contribution, and the $850 personal concessional contribution after the fund has taken out the 15% contributions tax on the $1,000.

 

At the end of the financial year you lodge your income tax return. In the income tax return you claim a tax deduction for the $1,000 personal contribution. The ATO also works out your co-contribution entitlement.

 

The ATO pays $250 to your super account as a co-contribution. You then get a tax refund of $325 for the $1,000 concessional contribution. (The 32.5% marginal tax rate applies to incomes from $37,001 to $90,000).

 

In summary, for your $1,500 personal contribution you'll end up with $1,600 in your super account, and $325 in your bank account as a tax refund.

 

I'm an ATO employee voluntarily providing my time here

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Taxicorn

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@SebReiter 

 

Great response, you should keep that as a macro.Smiley Happy

 

But don't forget the letter of intent.