Super Co-Contribution: How Do You Get Up to $500 From the Government?
A guaranteed 50% return the ATO pays into your super
If you earn a low or middle income, the government will literally pay you to save for retirement. Put $1,000 of after-tax money into super and you can receive up to $500 back, a guaranteed 50% return that no bank account or share portfolio can promise.
Why This Matters
Most tax strategies save you a percentage of your marginal rate. This one is simpler: it is free money, paid straight into your super by the ATO after you lodge your return. For eligible part-time employees and sole traders in a modest year, it is the highest-return, lowest-risk savings move available. And it compounds, because the extra $500 is invested inside super for decades before retirement.
Who It Applies To
Workers and sole traders earning under about $64,293 in 2026-27, where at least 10% of income comes from employment or business. The full $500 applies to incomes under about $49,293, then tapers off. You must be under 71 at the end of the year and lodge a tax return.
Key Rules for the 2026-27 Income Year
- Contribute after-tax money. Only non-concessional (after-tax) contributions count; salary sacrifice doesn't qualify.
- 50 cents per dollar. The government matches half of what you put in, up to $500 on a $1,000 contribution.
- Income limits are indexed. Roughly $49,293 for the full amount, phasing out to zero around $64,293.
- It happens automatically. Lodge your return and your fund reports the contribution; the ATO pays the co-contribution into your super.
- The 10% test. At least a tenth of your total income must come from employment or running a business; passive income alone doesn't qualify.
Not sure you qualify? The threshold is based on assessable income plus reportable super and fringe benefits, so it's worth checking before you rule yourself out. OzLedger can model your co-contribution eligibility before 30 June.
Common Mistakes to Avoid
- Salary sacrificing instead. Before-tax contributions don't attract the co-contribution; it must be after-tax money.
- Claiming a deduction for it. If you claim the contribution as a deduction, it stops being eligible.
- Missing the deadline. The fund must receive your contribution by 30 June.
- Assuming you earn too much. The threshold is based on assessable income plus reportable super and fringe benefits, worth checking before you rule yourself out.
A Practical Example
Tom works three days a week and earns $42,000. In May he transfers $1,000 from savings into his super fund as an after-tax contribution and lodges his return in July. In September the ATO deposits $500 into his super. He has turned $1,000 of savings into $1,500 of retirement money, a 50% instant return for five minutes of effort.
Put $1,000 of after-tax money into super and you can receive up to $500 back, a guaranteed 50% return.
Key Takeaways
A guaranteed 50% return
Up to $500 free on a $1,000 after-tax contribution, paid straight into your super.
After-tax contributions only
Salary sacrifice doesn't count. The contribution must be non-concessional money.
It happens automatically
Contribute by 30 June and lodge your return; the ATO calculates and pays the rest.
Great for part-timers
Ideal for part-time employees, modest business years, and lower-earning spouses.
Frequently Asked Questions
No. If you are eligible and your fund has your tax file number, the ATO calculates and pays it automatically after you lodge your return.
Yes. Business income counts toward the 10% work test, so a sole trader earning under the threshold qualifies just like an employee.
You still receive 50 cents per dollar, $200 in this case. Any amount up to $1,000 attracts the matching payment.
No. The test is based on your own income only, which makes it useful for a lower-earning spouse in a household.
No. It is a government payment that sits outside both contribution caps, and it isn't taxed on the way into your fund, so the full amount lands in your balance.
Ready to keep more of what you earn?
OzLedger prepares personalised 2026-27 tax plans for employees and sole traders, and can model your co-contribution eligibility before 30 June. Visit ozledger.com.au or email info@ozledger.com.au to get started.
This article is general information only and does not take into account your personal circumstances. It is not tax, legal or financial advice. Tax laws and thresholds change, and the figures here are based on ATO guidance current at the time of writing. Before acting, speak with a registered tax agent. The OzLedger team is always happy to help.