Are you an individual who is making personal eligible superannuation contributions?
At a glance: In the recently released 2009 Federal Budget, the government has announced they will cut the amount of their co-contributions to superannuation until the 2014/15 year.
The Superannuation co-contribution scheme was introduced by the federal government to assist eligible individuals in saving for their retirement by matching their personal superannuation contributions. Since the 2007 budget the government has been matching eligible contributions at 150% meaning that for every eligible $1 contributed the government co-contributed $1.50. In the recently released federal budget for 2009 the government announced it will be cutting this matching rate as of June 30, 2009.
The adjusted superannuation co-contributions rates from July 1, 2009 will be:
- 100% until the end of the 2011/12 income tax year, with a maximum co-contribution of $1000, reduced by 3.333 cents for each dollar by which the person's income exceeds the shade out threshold.
- 125% for the 2012/13 and 2013/14 income tax years, with a maximum co-contribution of $1,250, reduced by 4.167 cents for each dollar by which the person's income exceeds the shade out threshold.
- Return to 150% from the 2014/15 tax year and onwards, with a maximum co-contribution of $1,500, reduced by 5 cents for each dollar by which the person's income exceeds the shade out threshold.
Remember: The reduction in government co-contributions to superannuation is only temporary. You should understand how the cut in co-contributions may affect your superannuation planning. Contact us if you require any clarification or advice.
