Super savings for low income earners

About the author:

Terri Bradford
Author name:
By Terri Bradford
Job title:
Head of Wealth Management
Date posted:
09 February 2021, 10:20 AM

Three ways to maximise your savings potential using available superannuation strategies.

Government Co-contribution Scheme

How the scheme works

The co-contribution works in the following way:

  1. If you earn $39,837 or less in a financial year as assessable income, the Government will contribute 50 cents for every dollar you personally contribute into your super, up to a maximum of $500 in that year.
  2. Where your income is more than $39,837 but less than $54,837 in a financial year, your co-contribution payment will be adjusted based on your income and how much you personally contribute.

For example, if you are eligible and your income is $45,000 and you make a personal super contribution of $1,000 during the year, you will be entitled to a co-contribution payment of $328.

Eligibility for payment

You will be eligible for the co-contribution payment in a year of income if:

  • you make personal superannuation contributions to a complying superannuation fund or a Retirement Savings Account; and
  • you do not claim a tax deduction for the personal contribution; and
  • the contribution is not a spouse contribution where the contributing spouse is claiming a tax offset; and
  • your total income (assessable income plus reportable fringe benefits) is less than $53,564; and
  • 10% or more of your total income is derived from eligible employment (this includes self-employed people where at least 10% of total income is earned from carrying on a business, eligible employment or combination of both); and
  • you do not hold an eligible temporary resident visa at any time during the year; and
  • you lodge an income tax return for the year of income; and
  • you are less than 71 years old at the end of the year of income.

Government Co-contribution Matrix

You contribute:  $1000 $500 
Your income (less than or equal to):  Government payment:


 $500  $250
 $40,000  495 250 
 461  250
 428  250
 395  250
 361  250
 328  250
 295  250
 261  250
 228  228
 195  195
 $50,000  162  162
 128  128
 95  95
 62  62

Source: Morgans (the above amounts have been rounded to the nearest dollar)

Spouse Super Contributions

A tax rebate of up to $540 may be payable to an eligible individual if he or she makes a spouse superannuation contribution of up to $3,000 on behalf of their spouse.

The rebate is available if the receiving spouse earns less than $37,000 up to a maximum earnings threshold of $40,000 each year.

Be aware, however, that if a spouse rebate is claimed for the personal contribution, that particular contribution will not be eligible for the Co-contribution.

In order to maximise superannuation contributions for the low income earning spouse it can be prudent to make two separate contributions.

Low Income Superannuation Tax Offset

Individuals earning up to $37,000 of adjusted taxable income will effectively pay little or no tax on their superannuation guarantee (SG) contributions. Self-employed individuals making concessional contributions into super may also be eligible for the offset if their adjusted taxable income is below $37,000.

Under the Low Income Super Tax Offset (LISTO), eligible individuals will receive a tax offset up to a maximum of $500 which equals the 15% contributions tax on concessional contributions made during an income year.

The minimum tax offset available is $10 (rounded up if less than $10). The tax offset will be payable once the individual has lodged a tax return and the ATO has received contributions information from the relevant super fund.

Example 1

Chloe, age 18, has just started her first full-time job following completion of year 12 last year.

In her role as junior receptionist she will earn $22,000 pa. Her employer pays the standard 9.5% SG contribution on her $22,000 wage.

Chloe has no other income apart from this wage.

Thus: $22,000 x 9.5% SGC = $2,090

Contributions tax on this contribution will be: $2,090 x 15% = $313.50

Chloe is well under the income threshold of $37,000 so qualifies for a tax offset of $313.50. This effectively eliminates any contributions tax her super fund has paid.

Example 2

Desmond, age 63, works part-time at the local winery as the gardener.

He earns $37,500 pa in gross wages. His employer pays the standard 9.5% SGC into Desmond's nominated superannuation fund.

Thus: $37,500 x 9.5% SGC = $3,562.50

Contributions tax on this contribution will be: $3,562.50 x 15% = $534.37 (rounded down)

Even though Desmond's income is just over the $37,000 threshold there is no taper rate for eligibility to the LISTO. Accordingly, Desmond will not be eligible to receive a tax offset against the contributions tax.

Find out more

Call a Morgans adviser to discuss these and any other superannuation strategies that may be appropriate for you or your family member.

Request a call  Find local branch

Learning Centre 

We also have plenty of helpful information within our Learning Centre covering investment basics or financial planning for your stage of life.

Learning Centre

Disclaimer: The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents (“Morgans”) do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.

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