Low Income Super Contribution and Super Co-contribution

If you're a low-to-middle income earner, the Australian Government offers two powerful incentives to help grow your superannuation — and they’re not mutually exclusive. Eligible individuals may benefit from both the Low Income Super Contribution (LISC) and the Super Co-Contribution. These schemes aim to support your retirement by adding government funds directly into your super account.

1. Low Income Super Contribution (LISC)

Since 1 July 2012, the government has provided up to $500 per year to eligible individuals by contributing an amount equal to 15% of your employer’s superannuation contributions.

Eligibility Criteria:

• You must have concessional contributions made into your super fund

• Your adjusted taxable income is less than $37,000

• You are not a temporary resident

• At least 10% of your total income is derived from employment or business

• Your entitlement must be $20 or more

No action is required — simply lodge your tax return. If you qualify, the government will pay your LISC directly into your super fund, typically within 14 months after the end of the financial year.

Example:

If your taxable income is $33,000 and your employer contributes 9% ($2,970), you may receive:

15% x $2,970 = $445.50 as a government contribution to your super.

2. Super Co-Contribution

With the super co-contribution, the government matches your personal (after-tax) contributions to your super fund, up to a certain limit.

Contributions NOT Eligible for Co-Contribution:

• Employer-paid super guarantee contributions

• Salary sacrifice contributions

• Personal contributions where a tax deduction was claimed

• Contributions made by your spouse or others on your behalf

Eligibility Criteria:

• You made a personal (non-deducted) contribution

• Your total income is below the threshold

• At least 10% of total income is from business or employment

• You’re under 71 years old at the end of the income year

• You are not a temporary resident

• You lodged a tax return

Understanding “Total Income” and the 10% Rule

Total Income is not your taxable income. It is calculated as:

Assessable income + reportable fringe benefits + reportable employer super contributions – deductions

To meet the 10% rule, at least 10% of your total income must come from:

• Salary or wages

• Director’s fees

• Employment-related income

• Reportable fringe benefits

• Business income (e.g., sole trader or partnership)

If your income is mostly from dividends or interest, you won’t be eligible.

Co-Contribution Calculation

The co-contribution depends on several factors:

• Lower income threshold: $31,920

• Higher income threshold: $61,920 (may reduce to $46,920 if proposed changes pass)

• Maximum entitlement: $1,000 (may reduce to $500)

• Reduction rate: 3.333 cents per dollar

• Matching rate: 100% (may reduce to 50%)

Two Calculation Methods:

Calculation 1:

Co-contribution = Personal contribution × Matching rate

Calculation 2:

Co-contribution = Maximum entitlement – [(Total income – lower threshold) × reduction rate]

If your income is below the lower threshold, use Calculation 1. If it's between the two thresholds, use both and the lower amount applies.

Worked Examples

Example 1:You contribute $600 and earn $20,000.As your income is below the lower threshold, you receive:

$600 (100% match).

Example 2:You contribute $900 and earn $51,000.

• Calculation 1 = $900

• Calculation 2 = $1,000 – [($51,000 – $31,920) × 0.03333]= $1,000 – $364.05 = $635.95

Your co-contribution is the lower of the two:

$635.95

Note: If your entitlement is calculated to be between $1 and $20, you’ll still receive $20.

Maximise Your Super with Expert Advice

Superannuation rules and entitlements change frequently. If you’re unsure about your eligibility or how to structure your contributions, contact the team at Dolman Bateman. We’ll help ensure you’re making the most of every opportunity to build your retirement savings.

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Disclaimer:

The information provided in this article is general in nature and does not constitute personal financial, legal or tax advice. While every effort has been made to ensure the accuracy of this content at the time of publication, tax laws and regulations may change, and individual circumstances vary. Dolman Bateman accepts no responsibility or liability for any loss or damage incurred as a result of acting on or relying upon any of the information contained herein. You should seek professional advice tailored to your specific situation before making any financial or tax decision.