The superannuation rules have become simpler and more generous in recent years but understanding what they mean for you can still seem confusing.
Here is a simple explanation of super contributions – just refer to the table below for specific details and read further for a longer explanation under the age group that relates to you.
Major Types of Super Contribution
Firstly, a quick explanation of the different types of super contributions available:
- Super Guarantee
Employers must pay the superannuation guarantee for their employees (with a few exceptions)
- Other Employer Contributions
Employers can make additional contributions (including salary sacrifice) for their employees up to a maximum of $25,000 per year
- Personal Contributions
Contributions you make for yourself up to a maximum of $150,000 per year or $450,000 over a three-year period
- Government Co-contributions
When the government contributes to your super up to a certain limit
- Spouse Contributions
Contributions you make on behalf of your spouse.
| Type of contribution | Under 65 | 65-69 | 70-75 | Over 75 |
| Super guarantee | Yes | Yes | No | No |
| Other employer contributions | Yes | Yes | Yes | No |
| Personal contributions | Yes | Yes with a work test | Yes with a work test | No |
| Co-contributions | Yes if qualify | Yes if qualify | No | No |
| Spouse contributions | Yes | Yes with a work test | No | No |
In more detail…
If you are under age 65
The rules are simple. You can make or receive any type of contribution.
The government co-contribution is targeted at low to middle income workers so not everyone qualifies. To receive any co-contribution, you must earn at least 10% of your income from employment, including self employment, have income of less than $61,920 (2012/13 amount) and make a personal contribution. When you lodge your tax return, the Tax Office will calculate your co-contribution and pay into your fund.
If you make a contribution for your spouse, he or she must meet the age requirement and earn less than $13,800. For a contribution of $3,000 the contributing spouse can receive up to an 18% tax offset, knocking up to $540 off their tax.
If you are age 65 to 69
If you are working, your employer will still pay the superannuation guarantee and extra contributions like salary sacrifice. However, to make a personal contribution or receive a contribution from your spouse, you need to be working.
The work test is not difficult to satisfy. Sometime in the financial year, you must be gainfully employed (earning money) for 40 hours over any 30-day period. You could do it all in one week or work ten hours a week for four weeks.
If you are age 70 to 74
If you are working, your employer will make contributions for you and to make a personal contribution you must satisfy the work test (as above). You cannot receive the co-contribution or a contribution from your spouse.
If you are age 75 or over
You generally cannot make or receive superannuation contributions.
If you want to make sure your super is working as well as it could for your future, give us a call.
Sources:
www.ato.gov.au – Key Superannuation Rates and Thresholds
www.aph.gov.au/library/ – Superannuation for People Primarily Over 65 Years of
