The Super Co-Contribution: Up to $500 Free
For lower and middle income earners, the government matches a personal after-tax super contribution at 50c per dollar, up to $500 a year. It's a guaranteed 50% return on the first $1,000 — and at low incomes it often beats salary sacrifice.
- The strategy: make a personal after-tax (non-concessional) contribution; if you earn under the lower threshold (~$45,400 for 2024-25), the government adds 50c per dollar up to $500.
- The phase-out: the $500 maximum reduces as income rises and cuts out at the upper threshold (~$60,400). You also need to pass a work/income-source test.
- Why it's good: at low incomes the gap between your marginal rate and 15% is small, so the co-contribution's 50% match is usually the better-value move than salary sacrifice.
Where the AI summary above gets this wrong
"The super co-contribution is a small government top-up that isn't worth much, so salary sacrificing is always the better way to boost your super."
That's surface-true. Here's what it misses:
- It dismisses a 50% return — the co-contribution adds 50c per dollar — a guaranteed 50% return on the first $1,000. Few investments match that; calling it 'not worth much' is wrong.
- 'Salary sacrifice is always better' is false at low incomes — for someone in the 16% bracket, salary sacrifice saves only ~1c per dollar over the 15% super rate, while the co-contribution adds 50c. At low incomes the co-contribution wins.
- It ignores that the two can combine logic — the co-contribution needs an after-tax contribution, so it suits people who can't benefit much from a deduction — exactly the low-income earners the AI summary tells to salary sacrifice instead.
Cass's niece works part-time while studying and earns about $40,000. Salary sacrifice would save her almost nothing — her marginal rate is barely above 15%. The co-contribution, though, turns a $1,000 contribution into $1,500.
01 How the co-contribution works
If you make a personal after-tax contribution to super and your income is under the lower threshold (about $45,400 for 2024-25), the government contributes 50c for every dollar you put in, up to a maximum of $500 — reached with a $1,000 contribution. The match reduces as income rises and phases out completely at the upper threshold (about $60,400). You also need at least 10% of your income from employment or business, and to be under 71.
Shows: the government co-contribution you'd receive for a personal after-tax contribution (2024-25 thresholds). Ignores: the work/income-source test (10% from employment or business), the total super balance and non-concessional cap tests, and indexation of the thresholds.
On the defaults above, the worked example shows: The government adds 50c per $1 of after-tax contribution, up to $500 — an instant 50% return on the contribution.
Source: ATO — Super co-contribution
02 Why it beats salary sacrifice at low incomes
Salary sacrifice saves you the gap between your marginal rate and 15%. At low incomes that gap is tiny — in the 16% bracket it is barely a cent per dollar. The co-contribution adds 50c per dollar. So the standard advice inverts: below the threshold, an after-tax contribution that captures the co-contribution is far stronger than sacrificing.
The size of the difference is worth stating plainly. On $1,000 contributed, salary sacrifice at the 16% rate saves roughly $10 of tax. The same $1,000 contributed after tax attracts $500 from the government. That is not a marginal improvement over the alternative; it is fifty times it, and it is available only to people whose income is low enough that most contribution advice assumes they cannot afford to act on it.
There is no form. The ATO works it out from your tax return and the contribution report your fund lodges, then pays it into your super — usually within a couple of months of your return being assessed. What that means practically is that you must lodge a return to receive it, even if your income is below the threshold where lodging is otherwise required.
Source: ATO — Super co-contribution
03 The other low-income offset: LISTO
Alongside the co-contribution, low earners get the Low Income Super Tax Offset. If your income is $37,000 or under, the government refunds the 15% contributions tax on your concessional contributions — up to $500 — straight back into your super, automatically, via your tax return.
The effect is that for the lowest earners the 15% tax on employer contributions is effectively returned, which is the underlying reason salary sacrifice does so little at these incomes: there is barely any contributions tax left to save. Understanding that explains why the two low-income measures point in opposite directions from the standard advice. LISTO removes the tax that sacrificing would have reduced; the co-contribution adds money that sacrificing never could.
You do not apply for LISTO and there is no form. It arrives because your fund reports your contributions and you lodged a return, which again makes lodging the single action that unlocks both. The two stack: a low earner can receive a $500 co-contribution and a LISTO refund in the same year, from the same $1,000 contribution and the same employer contributions.
04 Couples: the spouse contribution offset
If one partner earns little or nothing, the other can contribute to their super and claim a tax offset of up to $540. The full offset applies where the receiving spouse's income is $37,000 or under, phasing out by $40,000, on a contribution of $3,000.
It is a different mechanism from the co-contribution and the difference matters. The co-contribution is the government matching a low earner's own money; the spouse offset is a tax rebate to the contributing partner for topping up someone else's super. One rewards the low earner, the other rewards the household.
They are also complementary rather than competing, and a couple with one low income can use both in the same year: the low earner contributes $1,000 of their own money and collects up to $500 from the government, while the higher earner contributes $3,000 to that same account and claims up to $540 off their own tax bill. That is $4,000 contributed for a net household cost of about $2,960, before anything is invested.
The offset is claimed in the contributing partner's tax return, and the contribution must be a non-concessional one made to a complying fund for a spouse under 75.
Source: ATO — Spouse super contributions
05 Who should use it
The co-contribution suits part-time workers, students with a job, people returning to work after a break, and anyone having a year of unusually low income. A non-working spouse will not qualify because of the 10% work or business income test, but the spouse-contribution offset above is the related option for couples.
Three practical points. The contribution must be a personal after-tax contribution — not salary sacrifice, and not one you claim a tax deduction for, because claiming the deduction converts it to a concessional contribution and disqualifies it. It must reach your fund by 30 June, and fund processing is not instant, so the last week of June is later than it sounds. And if you are near the lower threshold, a partial co-contribution is still worth having: the match tapers rather than stopping, so being $3,000 over the line costs you $250 of match, not all of it.
You can also collect the Low Income Super Tax Offset in the same year, and neither reduces the other. For someone earning $40,000 who contributes $1,000 after tax, the combination of a $500 co-contribution and a LISTO refund on the contributions tax is the highest guaranteed return available anywhere in the system.
Source: ATO — Super co-contribution
I get frustrated when low-income earners are told to salary sacrifice. At a 16% marginal rate, sacrificing saves almost nothing, but $1,000 of after-tax money pulls in $500 from the government — a guaranteed 50%. If your income's under the threshold and you can find $1,000 before 30 June, this is close to the best-value move in the whole system. Don't let 'salary sacrifice is always best' talk you out of it.
FAQ
How much is the super co-contribution?
Up to $500 a year. The government adds 50c per dollar of personal after-tax contribution, with the maximum at a $1,000 contribution, if your income is under the lower threshold (~$45,400 for 2024-25).
What are the income thresholds?
For 2024-25, the full co-contribution applies under about $45,400, phasing out to nil at about $60,400. The exact figures are indexed each year.
Do I have to apply for the co-contribution?
No. The ATO calculates it automatically from your tax return and your super fund's contribution report, and pays it into your fund.
Is the co-contribution better than salary sacrifice?
At low incomes, usually yes — it adds 50c per dollar, while salary sacrifice only saves the small gap between a low marginal rate and 15%. At higher incomes you can't get the co-contribution, so salary sacrifice takes over.
Sources
Regulator references
- ATO — Super co-contributionThe government super co-contribution and the income test that determines it.Last verified: 2026-06-19
- ASIC Moneysmart — Super contributionsThe types of super contribution — employer, salary sacrifice, personal and spouse — and their caps.Last verified: 2026-06-19
Calculator unit tests · the assertions this page's worked example is checked against, and their last result
Changelog
- 2026-06-19 — initial publish (new format)
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Jordan Reeves
Founder of Talk Through Wealth. A software engineer for over a decade before turning to retirement planning, Jordan built the projection engine after watching family members get fragmented, country-by-country advice that never reconciled. He writes about retirement the way the engine computes it: month-by-month, lifetime-long, and skeptical of any rule of thumb that hasn't been run through the math.