Announcements
COVID-19 update: We’ve published information on the Jobkeeper payment, early access to super, and cash boost for businesses and employers. You can also check out the COVID-19 board.

ATO Community

Co-contribution or tax deduction for low income earner?

Newbie

Views 166

Replies 1

I have made a after-tax super contribution of $1000 and am not sure whether to claim a tax deduction or the government co-contribution. I have already completed the intent to claim a deduction form and meet the eligibility requirements for both options.

 

If my gross pay was ~$28,000 (so a low tax bracket), how much of a deduction would I get on my tax? I am not sure how it works.

 

Also, if I don't want to claim the deduction and instead want to receive the co-contribution, what should I do on myTax? The only tab I can see that refers to super contributions is under the deductions section. Should I just not state my super contribution at all on my tax return if I want to claim the co-contribution? 

 

Thanks in advance!

1 ACCEPTED SOLUTION

Accepted Solutions
Highlighted

Best answer

Taxicorn

Replies 0

Option 1:

Claim Super co-contribution  -  Receive $500 in super, so you now have $1500 in super.

 

Option 2:

Claim Tax deduction: Notify super of tax deduction being claimed, the super contribution is now taxed at 15% so you now only have $850 super contribution.

 

Tax difference between (not claiming $28,000) and (Claiming $27,000) = $1,722 v $1,432 ($290 better off for tax, but have lost $150 in super)

 

This is assuming that you (a) have $0 deductions because the tax is calculated on taxable income, not gross income, have no dependents or spouse. If you did there would be a slight reduction to medicare liabilities but not much.

 

So do you want $1500 in your super and pay $290 more in income tax OR have $850 in your super and pay $290 less in income tax?

 

I would choose Option 1.

 

To receive the super co-contribution you do nothing in myTax, the government will automatically pay you it once it sees that you did NOT claim a deduction.

 

 

 

 

 

1 REPLY 1
Highlighted

Best answer

Taxicorn

Replies 0

Option 1:

Claim Super co-contribution  -  Receive $500 in super, so you now have $1500 in super.

 

Option 2:

Claim Tax deduction: Notify super of tax deduction being claimed, the super contribution is now taxed at 15% so you now only have $850 super contribution.

 

Tax difference between (not claiming $28,000) and (Claiming $27,000) = $1,722 v $1,432 ($290 better off for tax, but have lost $150 in super)

 

This is assuming that you (a) have $0 deductions because the tax is calculated on taxable income, not gross income, have no dependents or spouse. If you did there would be a slight reduction to medicare liabilities but not much.

 

So do you want $1500 in your super and pay $290 more in income tax OR have $850 in your super and pay $290 less in income tax?

 

I would choose Option 1.

 

To receive the super co-contribution you do nothing in myTax, the government will automatically pay you it once it sees that you did NOT claim a deduction.