Australians who work part-time can boost their pension by $500 simply by making a contribution and receiving a top-up from the government.
If you earn $45,400 or less, the government will match your eligible super contribution at 50 cents for every dollar contributed, up to a maximum of $500 a year.
That means someone who contributes $1,000 into their super, on top of the mandatory employer contribution, will receive another $500 from the federal government to add to their retirement savings.
All benefits would go to part-time workers and the threshold would be lowered to just below the full-time minimum wage of $47,627.
H&R Block tax communications director Mark Chapman told Daily Mail Australia this was the best way for low-income people to increase their super.
“To help you save for retirement, the government has an incentive program that rewards you for making eligible personal contributions to your retirement fund,” he said.
Low-income people with less than $60,400 can put up to $1,000 into their super, but government co-contributions are less generous the closer the income level gets to that threshold.
Someone who earns up to $51,400 receives $300 whether they contribute $600 or $1,000.
Australians working part-time can boost their superannuation by $500 simply by making a contribution and receiving a top-up from the government (pictured, a Sydney bartender).
Those who earn $54,400 receive $200 for every $400 they contributed, and the government contribution is the same if they contribute $1,000.
For $57,400, the government returns $100 for contributions of $200 or $1,000, and the benefit phases out upon reaching the $60,400 threshold.
That threshold includes reportable fringe benefits, such as a company car, and reportable employer retirement contributions minus eligible tax deductions for running a business.
Chapman said contributions had to be made to the super by June 30 next year.
‘Then you file your tax return. Within a period of 60 days, the government pays the co-participation to the retirement fund,” he stated.
But the government super co-contribution only goes into an account if someone has provided their tax return number and is a permanent resident or citizen.
“Your retirement fund cannot accept after-tax contributions or receive co-contributions on your behalf if you have not provided your tax file number to your fund,” Mr. Chapman said.
The government co-contribution is available to people aged 70 or younger when filing a tax return for the 2024-25 financial year from July, who had less than $1.9 million in retirement savings.
The government co-contribution is available to people aged 70 and under when they file a tax return for the 2024-25 financial year from July (pictured, a couple in Cronulla, in Sydney’s south).
Concessional super contributions cannot exceed $120,000 a year, and this threshold is likely to affect low-income workers who earn money from investments or who have received a windfall.
The government co-contribution does not apply to someone transferring their super from another foreign fund or super funds, nor to super contributions designed to obtain a tax deduction.
Someone must have earned 10 percent or more of their total income from running a business, being self-employed, or being employed.
Since July 1, employers must pay 11.5 percent of a person’s income into retirement.
But someone who makes an additional contribution pays tax at a concessional rate of 15 per cent when their super fund receives the deposit.
Australians also pay a 15 per cent tax on earnings during the accumulation phase of superannuation, but the income stream is tax-free after age 60.
Retirement tax rates are lower than the marginal tax rate of 16 percent for incomes between $18,201 and $45,000 and the tax rate of 30 percent for those earning between $45,001 and $135,000.
The Australian Superannuation Fund Association recommends $595,000 for a comfortable retirement, but the average Australian has just $164,126 in super, tax office data shows.