Super money for nothing – from the government!

Everyone likes getting something for nothing. Of course we all know nothing is for free but money’s harder to earn than it is to spend. So any freebie or discount can’t be bad!

Here I’m going to list five simple government benefits that you might not know about or know how to use correctly.

1. Government co-contribution

By making personal super contributions that aren’t claimed as tax deduction, you can get the government to pay a contribution into your super fund.

There is a range of eligibility criteria to get this benefit.

The maximum the Government will pay is $500 for those who earn less than $33,516 in the 2013/14 financial year. If you earn more than this threshold then the maximum the government will pay is reduced.

In the 13/14 financial year, if you earn more than $48,516 then you will not receive any co-contribution.

The Tax Office has the following helpful table on its website to show you what’s available:

In the 2014/15 financial year, the $33,516 income level will increase to $34,488 which means the co-contribution won’t be payable for incomes above $49,488.

Earnings in this definition include assessable income, reportable fringe benefits and voluntary employer super contribution (such as, salary sacrifice contributions).

To receive the co-contribution you must not be a temporary resident. In addition you must meet the following two rules:

10% or more of your total income needs to be from eligible employment, running a business or a combination of both.
You were less than 71 years old at the end of the income year.

You receive the co-contribution after you have submitted your tax return and the Tax Office has worked out if you’re eligible to receive it.

2. Low income tax offset (LITO)

The LITO is payable when you earn modest taxable income (note the different definition of income compared to the government co-contribution rules).

LITO isn’t payable when you have taxable income less than $66,667 in the 2013/14 financial year:

LITO is in addition to the tax-free threshold of $18,200. In the past you could only claim LITO after submitting your tax return. You can still do this or can elect to receive it throughout the income year.

Please note that at this stage LITO will fall to $300 in 2015/16. Although there is some doubt whether or not this change will actually take place, nothing official has been announced.

3. Spouse contribution tax offset

The maximum payable here is a modest $540. This offset has been around for more than 15 years and its eligibility rules have never been changed.

You will only get this tax offset if you make superannuation contributions for a person who is your spouse at the time those contributions are made. The following rules also have to be met:

You don’t make the contributions as your spouse’s employer (as you would ordinarily be eligible to claim a tax deduction on those contributions).
You and your spouse weren’t living permanently apart when the contribution was made.
Your spouse satisfies an income test that requires their assessable income for tax purposes (that is, income subject to tax including realised capital gains) before any tax deductions plus any employer provided reportable fringe benefits and voluntary employer super contributions is less than $10,800. A partial tax offset is payable if income as defined here is less than $13,800.
The contribution must be made before your spouse turns 65 years of age (it’s technically possible to make this contribution after they turn 65 but they would need to satisfy a work test and other criteria).

4. Senior concession cards

I detailed many of these concessions in December 2012. Please read this article here.

Since that time the federal government has reduced the funding it used to provide to the States and Territories for these discounts. Most of these governments have announced that they will maintain access to some of these concessions. Here’s a summary of what’s available (before the federal government’s decision):

Also available is the Seniors Card in each State and Territory, which might provide access to discounts at private businesses such as cinemas and restaurants.

5. Senior and pensioner tax offset (SAPTO)

There are four main eligibility criteria for the SAPTO:

You must be eligible for the age pension.
You must be eligible for the Centrelink age pension (or DVA age pension if a war veteran or war widow) because you pass the incomes and assets tests. A special rule exists for people who were eligible to receive the age pension but either chose not to apply for it or were ineligible to receive it because of the income or assets test.
Must not in prison.
Your taxable income (in the 2013/14 income year) if single must be less than $50,119 and if a couple your combined taxable income must be less than $83,580.

Also from 1 July 2009 onwards the definition of income has been expanded to include reportable fringe benefits, reportable employer superannuation contributions (salary sacrifice contributions), personal deductible superannuation contributions and net investment losses.

The relevant table for SAPTO is as follows for 2013/14:

The maximum SAPTO is reduced by 12.5c for every dollar that “income” (as per the revised definition noted above) is greater than its lower income threshold.

The income threshold amounts for 2014/15 haven’t been released.

Unused SAPTO

If a couple were both eligible for SAPTO and one of them doesn’t fully use it, the unused portion may be available for transfer to the other person.

To work out eligibility the ATO uses the amounts written in the spouse details section of your tax return to see if the unused portion can be transferred. Note, however, that when working out if SAPTO can be transferred the ATO doesn’t take into account any other tax offsets that a spouse might be eligible for.

Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.