We're nearing 30 June, which means it could be time to invest in your super. The Federal Government may make a co-contribution to your retirement account up to a maximum amount of $500.
It may sound too good to be true, but it's really not. Here's how to receive a handy boost to your retirement accounts today.
How to invest in super and receive $500
The basic premise of the scheme is to encourage Aussies to support their own retirement. More self-funded retirees are good for the government as it reduces the burden on Australia's social security.
It's important to note that this co-contribution is only available for 'low or middle-income earners' who invest in super. That's a little bit vague, so let's dive into exactly who fits this category.
To be eligible for the contribution, you must have made at least 1 after-tax super contribution during the financial year (i.e. 23 before June), be less than 71 years old, not hold a temporary visa, lodge your tax return and have a total superannuation balance less than $1.6 million.
There's also the income test which is key to this. To be eligible for a co-contribution, you must have total income (i.e. all income before salary packaging) of less than $53,464.
If you earn less than $38,564 and invest $1,000 in super, you may be eligible for a 50% match or $500. According to the ATO, "if your total income is between the two thresholds, your maximum entitlement will reduce progressively as your income rises."
That means a $1,000 investment could get matched with an instant $500. It's hard to beat an instant 50% return on investment right now.
What's the catch?
There really is no catch to this if you want to invest in super. Of course, that money is locked away until the preservation age and is subject to potential liquidity or regulatory issues.
If you really want to invest in Afterpay Ltd (ASX: APT) shares or other ASX shares then maybe the co-contribution scheme isn't for you.
However, savvy investors could do well to invest in super and cash in on the Federal Government's retirement boost.
