Small business owners need to be aware of recent changes to the way the ATO calculates income in order to qualify for the co-contribution benefit.
For the 2011 financial year, the Federal Government will match contributions that individuals make to their super fund, as long as that individual meets the income test.
From 1st July 2010, an individual must earn less than $31,920 to qualify for the maximum co – contribution of $1,000. For every dollar earned over this threshold, the co-contribution reduces by 3.35 cents until it cuts out completely at the upper income threshold of $61,920.
What has changed is that reportable employer super contributions (ie those contributions above 9%) are included in earnings for the co-contribution benefit as is fringe benefits.
Small business owners need to consider their total income, as defined by the co-contribution benefit – when looking at the tax efficient way to extract money form their private businesses.
If you need to discuss these changes, please call Mike on 0401 631 904