To continue your calculation, select the BACK button on your browser.

Key Terms Explained

Contents

Total income

Reportable fringe benefits amount

Reportable employer superannuation contributions

Income attributable to eligible employment-related activities

Age requirements

Eligible temporary resident visas

Income tax return

Personal super contribution

Super co-contribution thresholds

Business income

Partnership distribution

Other income

Business deductions

Complying super fund

Retirement savings account


Total income

There are two income tests you must satisfy to be eligible for the super co-contribution. Both income tests use your total income to measure if you meet the eligibility requirements, however your total income is calculated differently for the purposes of these two income tests

  1. For the income threshold test, your total income (assessable income + reportable fringe benefits + reportable employer super contributions [applicable for the 2009-10 income year onwards] minus allowable business deductions [applicable for the 2007-08 income year onwards] ) must be less than the higher income threshold for the income year.

  2. For the 10% eligible income test, 10% or more of your total income must be attributable to eligible employment-related activities, carrying on a business or a combination of both [please note income from carrying on a business is only included from the 2007-08 income year onwards].  Your total income is not reduced by your allowable business deductions for the purposes of the 10% eligible income test.

The 10% eligible income test is calculated, and expressed as a percentage, by:

Amounts attributable to eligible employment-related activities and/or business income x 100
(Total assessable income + RFBT + RESC)

The result of this calculation must be greater than 10%.

For the income threshold test, the calculator estimates your ‘total income’ for the higher and lower income threshold tests by adding together the amounts you provide at:

For the purposes of the 10% “eligible income” test, the calculator works out your total income by using the amounts you provide at:

Examples of items included in your total income are:

For the purposes of the income threshold test, from the 2007-08 income year onwards, your total income is reduced by your allowable business deductions if you are a sole trader (i.e. self-employed).

Amounts that are not part of your total income include the following:

  • The deductible amount of the undeducted purchase price of a pension is not included as part of your total income.
  • Your full share of a partnership distribution, only the net distribution is included in your total income – that is, after the partnership expenses have been deducted.
  • Your full share of a trust distribution - the amount of the trust distribution after the trust expenses have been deducted.
  • Your full share of the gross rent from your jointly owned rental property. Only your share of the net rent is included in your total income – that is, after expenses such as interest, repairs and other rental expenses have been deducted from the gross rental income. This is because it is considered income from a tax law partnership and under income tax law, a partner’s assessable income is the partner’s interest in the net income of the partnership.
    •  

    direction For more detailed information, refer to reportable fringe benefits amounts, reportable employer superannuation contributions, income attributable to eligible employment-related activities, other income, or business deductions.

    Self-employed

    From 1 July 2007, if you’re self-employed, your total income is reduced by any allowable business deductions you may have. This is only when we compare your total income with the higher income threshold to help us determine whether you qualify for a super co-contribution. For the purposes of the income threshold test, your total income (less allowable business deductions) must be less than the higher income threshold for the income year.

    Your total income is not reduced by your allowable business deductions when we apply the 10% eligible income test to work out if 10% or more of your total income is attributable to eligible employment-related activities, business income or a combination of both.

    direction For help with working out your total income, phone us on 13 10 20.

    Reportable fringe benefits amounts

    Generally, fringe benefits are non-cash benefits either you or an associate (for example, your spouse or children) receive because of your employment. They may include:

    Reportable fringe benefits amounts are the ‘grossed-up taxable value’ of your benefits. The grossed-up taxable value of a benefit is the gross salary that you would have to earn, in order to purchase the benefit from after-tax dollars. For example, an individual fringe benefits amount, (in relation to an employer), of $2,000 (in the FBT year ending 31 March 2010) is equal to a reportable fringe benefits amount of $3,738 (the grossed up taxable value of the fringe benefit).

    The reportable fringe benefits exclusion threshold is $2,000 from 1 April 2007. Before 1 April 2007, it was $1,000. Your employer has to calculate and report these amounts on your payment summary if the amounts are greater than the relevant fringe benefits reporting exclusion threshold. You must then declare the total of all your reportable fringe benefits amounts, as shown on all your PAYG payment summaries, in your income tax return.

    We add the amount of your total reportable fringe benefits amounts you show on your income tax return to your assessable income to work out your total income

    direction For more information, including the current value of the fringe benefits reporting exclusion threshold, refer to Reportable fringe benefits – facts for employees (NAT 2836).
     
    For examples, refer to the case studies on total income    .

    Reportable employer super contributions

    Reportable employer super contributions only apply from the 2009-10 income year onwards, and include contributions your employer makes on your behalf:

    If your employer makes reportable employer super contributions on your behalf, they will include the total amount of these contributions on your end of income year payment summary. You must copy this amount (your total reportable employer super contributions) into your income tax return and we will use it to work out your total income for the income year.

    direction For more information, refer to Reportable employer super contributions (NAT 72916 )

    Income attributable to eligible employment-related activities

    To be eligible to receive a super co-contribution, 10% or more of your total income must be:

    For the purposes of the 10% eligible income test, the calculator works out your total income by using:

    For the 2009-10 year onwards, the 10% eligible income test is calculated, and expressed as a percentage, by:

    Amounts attributable to eligible employment-related activities and/or business income x 100
    (Total assessable income + RFBT + RESC)

    The result of this calculation must be greater than 10%.

    Eligible employment-related activities are generally any activities you perform as an employee. This can include work you perform under a contract if you are mainly contracted for your labour. For example, salary and wages.

    Eligible employment-related activities also include the work a director does for a company in return for director’s fees. For example, if your company pays you director’s fees, your income is attributable to eligible employment-related activities rather than to business income.

    Income attributable to eligible employment-related activities includes, reportable fringe benefits or reportable employer super contributions connected with those employment-related activities in the income year.

    Income attributable to employment-related activities may also include:

    direction For help with working out if your income is attributable to eligible employment-related activities, phone us on 13 10 20.

    Age requirements

    To be entitled to the super co-contribution, you must be less than 71 years old at the end of the income year in which you make the eligible personal super contribution.

    Example

    Mary turns 71 years of age on 6 June 2007. She will not be eligible for the super co-contribution for the 2006–07 year as she will not be under 71 years of age at the end of the income year in which she made the eligible personal super contribution.

    Eligible temporary resident visas

    For the 2008-09 and earlier income years, the eligibility requirement was that you must not hold an eligible temporary resident visa at any time during the income year.

    From 1 July 2009 (the 2009-10 income year onwards) you will not be eligible for a super co-contribution if you hold a temporary visa (under the Migration Act 1958) at any time during the income year, unless at all times when you held such a visa you are either a New Zealand citizen or the holder of a visa prescribed for the purposes of subsection 20AA(2) of the Superannuation (Unclaimed Money and Lost Members) Act 1999.

    Generally, if you are an Australian resident or a New Zealand permanent resident working in Australia, you will be eligible for the super co-contribution if you meet all other eligibility criteria.

    Income tax return

    You must lodge an income tax return to receive the super co-contribution, even if you don’t have to do so for income tax purposes. We can only work out if you are eligible for a super co-contribution once your tax return has been lodged and processed as we require the information to work out your total income for the income year.

    Eligible personal super contribution

    Eligible personal super contributions are the amounts you choose to contribute to your super fund or retirement savings account (RSA) from your after tax income. If you make personal super contributions, and claim a deduction for those contributions, they are only 'eligible' personal super contributions for super co-contribution eligibility purposes only to the extent that they are/were not allowed as a tax deduction.

    You must contribute eligible personal super contributions yourself. Contributions your spouse makes to your super are not included. You can ask an employer to pay contributions for you from your after tax income (for example, by arranging regular payroll deductions) and these are treated as eligible personal super contributions.

    You must make one or more eligible personal super contributions during the income year to qualify for the super co-contribution (provided you also meet all other eligibility requirements). You must also make the contributions to a complying super fund or retirement savings account.

    The following are not eligible personal contributions:

    Super co-contribution thresholds

    The way we determine your eligibility and how we work out your super co-contribution entitlement depends on your total income and the income thresholds for the income year in which you made your eligible personal super contributions.

      Lower income threshold Higher income threshold What you will receive for every $1 of personal super contributions you make

    Your maximum entitlement
    1 July 2003 - 30 June 2004 $27,500 $40,000 $1 for every $1, up to a maximum co-contribution of $1,000 a year. Your maximum entitlement amount is $1,000. However, you must reduce this by 8 cents for every dollar your total income is over $27,500 up to $40,000.
    1 July 2004 -30 June 2007 $28,000 $58,000 $1.50 for every $1, up to a maximum co-contribution of $1,500 a year.

    attention For the 2005-06 income year, you will receive an additional one-off payment, doubling your co-contribution entitlement.

    		Your maximum entitlement amount is $1,500. However, you must reduce this by 5 cents for every dollar your total income is over $28,000 up to $58,000.
    1 July 2007 - 30 June 2008 $28,980 $58,980 $1.50 for every $1, up to a maximum co-contribution of $1,500 a year. Your maximum entitlement amount is $1,500. However, you must reduce this by 5 cents for every dollar your total income is over $28,980 up to $58,980.
    1 July 2008 - 30 June 2009 $30,342 $60,342 $1.50 for every $1, up to a maximum co-contribution of $1,500 a year. Your maximum entitlement amount is $1,500. However, you must reduce this by 5 cents for every dollar your total income is over $30,342 up to $60,342.
    1 July 2009 - 30 June 2013 $31,920 $61,920  $1 for every $1 up to a maximum co-contribution of $1,000 a year Your maximum entitlement is $1,000. However, you must reduce this by 3.333 cents for every dollar your total income is over $31,920 up to $61,920

    Business income

    Where you are carrying on a business , your business income is income you receive personally that is attributable to your carrying on a business. It includes:

    Business income does not include:

    Partnership distribution

    A partnership distribution is your share of the net income or net loss of a partnership, after partnership expenses have been deducted.

    Other income

    When we say other income, we’re usually referring to any assessable income you have that is neither your income attributable to eligible employment-related activities nor your business income.

    Business deductions

    Your business deductions are all the business expenses you are allowed to claim as a deduction (attributable to carrying on a business) on your income tax return including:

    Business deductions include expenses such as:

    Business deductions don’t include things you can claim personally that are not connected with your business, such as:

    Any business deductions carried over from previous income years to the current income year (prior year deferred non-commercial business losses) should be included in ‘business deductions’.

    Any business deductions carried over from the current income year to future income years (deferred non-commercial business losses) should be subtracted from ‘business deductions’.

    Complying super fund

    Super funds are managed by trustees. Each fund has its own rules, but must also follow government rules (prudential regulation) designed to ensure your super is properly managed. Funds that elect to follow these rules are called regulated super funds and if no contraventions of the regulatory provisions occur for the relevant income year, they are considered a complying super fund for the income year.

    A complying fund receives concessional tax treatment, including a concessional tax rate of 15% on the part of the fund’s taxable income that is the ‘low tax component’.

    If a super fund loses its complying status, it is not entitled to the tax concessions that are available to complying super funds. This means they pay tax equivalent to the highest marginal tax rate plus the Medicare levy on the fund’s taxable income for the year of income.

    Retirement savings account (RSA)

    RSAs are not super funds but operate under similar rules. Retirement savings accounts are offered by approved financial institutions. Just like complying super funds, they accept super contributions and provide benefits upon retirement, invalidity or death of the account holders.

    direction For more information, refer to Super co-contribution.


    To continue your calculation, select the BACK button on your browser.