If your income is under a certain threshold, then making personal after-tax super contributions could enable you to qualify for a Government co‑contribution and take advantage of the low tax rate payable in super on investment earnings.
How does the strategy work?
If you are under 71 at the end of the financial year, earn1 less than $60,400 pa (of which at least 10% is from eligible employment or carrying on a business) and you make personal after-tax super contributions, the Government may also contribute into your super account. This additional super contribution, which is known as a co-contribution, could make a significant difference to the value of your retirement savings over time.
To qualify for a co-contribution, you will need to meet a range of conditions, but as a general rule:
- the maximum co-contribution of $500 is available if you contribute $1,000 and earn $45,400 or less
- a reduced amount may be received if you contribute less than $1,000 and/or earn between $45,400 and $60,400, and
- you will not be eligible for a co-contribution if you earn $60,400 or more.
The Australian Taxation Office (ATO) will determine whether you qualify based on the data received from your super fund and the information contained in your tax return for that financial year. As a result, there can be a time lag between when you make your personal after-tax super contribution and when the Government pays the co‑contribution. If you’re eligible for the co-contribution, you can nominate which fund you would like to receive the payment. Alternatively, if you don’t make a nomination and you have more than one account, the ATO will pay the money into one of your funds based on set criteria.
Note: Some funds or superannuation interests may not be able to receive co-contributions. This includes unfunded public sector schemes, defined benefit interests,
traditional policies (such as endowment or whole of life) and insurance only superannuation interests.
Other key considerations
- You can’t access super until you meet certain conditions.
- You may want to consider other ways to contribute to super, such as salary sacrifice or personal deductible contributions.
Seek advice
An independent financial adviser can help you determine whether you should make personal super contributions and assess whether you will qualify for a Government co-contribution.
- Includes assessable income, reportable fringe benefits and reportable employer super contributions, less business deductions and assessable First Home Super Saver amounts. Other conditions apply. ↩︎
- Includes Medicare Levy. ↩︎
Case study
Ryder, aged 40, is employed and earns $35,000 pa. He wants to build his retirement savings and can afford to invest $1,000 a year. After speaking to a financial adviser, he
decides to use the $1,000 to make a personal after-tax super contribution. By using this strategy, he’ll qualify for a co-contribution of $500 and the investment earnings will be taxed at a maximum rate of 15%. Conversely, if he invests the money outside super each year (in a managed fund, for example), he will not qualify for a co-contribution and the earnings will be taxable at his marginal rate of 18%2.
| Details | Invest outside super | Make personal super contributions |
| Amount invested | $1 000 | $1 000 |
| Plus co-contribution | Nil | $500 |
| Total investment | $1 000 | $1 500 |
| Tax rate payable on investment earnings | 18% | $15% |
If you have questions or need guidance, talk to your independent financial adviser or get in touch with us on 1300 451 339. We can help you understand what the changes mean for you and how to make the most of your support.
IMPORTANT INFORMATION: This document has been prepared by Periapt Advisory Pty Ltd, ABN 67 648 208 253 AFSL 542418, based on our understanding of the relevant legislation at the time of writing. The information is of a general nature only and has been prepared without consideration of any particular individual’s objectives, financial situation, or needs. Before making any decisions, we recommend you consider independent financial advice. Current at 16 December 2025.
