Super Co-Contribution is a government initiative to help build super for low income taxpayers. In May 07 budget the treasurer announced that co-contribution will be doubled for those people who made personal contributions in the year ended 30th June 2006. This means that  someone who had persnally contributed $1,000 in the year 2006 and had total income of less then $28,000 will be paid $3,000 co-contribution by the Government, before 30th June 2007.

This has prompted trustees of self managed super funds to make personal contributions for their children who are on low income and to assist them in obtaining Government co-contribution.

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

• you make personal superannuation contributions to a complying superannuation fund or a retirement savings account (RSA)
• your 'total income' (assessable income plus reportable fringe benefits) is less than $58,000 (This may be different to your taxable income)
• 10% or more of your total income is from eligible employment
• you do not hold an eligible temporary resident visa at any time during the year
• 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.

Eligible employment generally means anything resulting in you being treated as an employee.

Amounts from eligible employment also includes some income of employees who think of themselves as being self-employed, such as those who run their business through a company and the company pays them salary or wages.

To be entitled to the co-contribution you must be less than 71 years old at the end of the income year in which you make the personal superannuation contribution. Please note that minimum 9% contribution is not required for employees under 18 years of age working 30 hours or less per week.

For gainful employment, it will be necessary to show that the child has done some work to earn income. However, in some cases it could be easy to prove that the child has done some work to earn income, like 12 year old delivering newspapers for a news agency etc. but in some cases any income diverted to a child could get caught in alienating of income rules or Part IV of the Income Tax Act.

 

 

 

 

The trust deed available at www.trustdeed.com.au includes the above provisions and cost only $110. You can keep the trust deed up to date for the next five years for only $165.

 

As time of the essence, a trust deed on this website can be created / updated in 20 Minutes!

Companies can be formed on www.trustdeed.com.au for only $470 including ASIC fees of $400 (available soon).

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