Financial Planners and Investment Advisers Sydney North Shore  1300 623 936 rob@mcinvest.com.au

Boost your spouse’s super savings

If your partner is a stay-at-home parent, working part-time, out of work, or earning a low income then it’s likely they’re not earning much super. This means their super can fall behind.

The good news is, there are ways you can help your partner’s super continue to grow. If you’d like to help them by putting money into their super, you might be eligible for a tax offset. A ‘win-win’ for you both!

Who’s eligible for a spouse contribution offset?

To be entitled to the spouse contributions tax offset:

  • You must make a contribution to your spouse’s super. This is a contribution made using after-tax dollars, which you haven’t claimed as a tax deduction
  • You must be married or in a de-facto relationship (this includes same-sex couples)
  • You must both be Australian residents
  • The receiving spouse has to be under the age of 65, or if they’re between 65 and 69 they must meet work test requirements, meaning they were gainfully employed during the financial year for at least 40 hours over a period of no more than 30 consecutive days
  • The receiving spouse’s income must be $37,000 or less for you to qualify for the full tax offset and less than $40,000 for you to receive a partial tax offset.

How does the spouse contribution offset work?

If you’re eligible, you can generally make a contribution to your spouse’s super fund and claim an 18% tax offset on up to $3,000 through your tax return.

To be eligible for the maximum tax offset, which works out to be $540, you need to contribute a minimum of $3,000 and your partner’s annual income needs to be $37,000 or less. If their income exceeds $37,000, you’re still eligible for a partial offset. However, once their income reaches $40,000, you’ll no longer be eligible, but can still make contributions on their behalf. The money you put into their super is treated as a non-concessional (after tax) contribution.

What counts as income?

Income includes assessable income, fringe benefits and employer super contributions.

Can I make a spouse contribution of more than $3,000?

Yes, you can contribute more than $3,000, but you won’t receive the spouse contribution tax offset on anything above $3,000.

Are there any other restrictions?

You can’t contribute more than your spouse’s non-concessional contributions cap. This is currently $100,000 for everyone, however, if your spouse is under 65 years, they may be able to contribute up to three financial years of this cap in the one year under the ‘bring-forward rules’.

You should also bear in mind that non-concessional (after tax) contributions can’t be made once someone’s super balance reaches $1.6 million (for 2019-20) or more on 30 June of the previous financial year in which the contribution was made.

How do I make a spouse contribution?

Speak with your partner’s super fund about how to make the contribution into their super account. You’ll probably need to complete a form when making the payment. Remember, if you’re hoping to claim the tax offset in this financial year, the contribution needs to be received and allocated to your spouse’s super account by 30 June. So, don’t leave it until the last minute, or you might miss the tax benefit on offer this year.

Illustrating with an example

Stana and Peter are married. Stana has a salary of $85,000.

Stana would like to make a contribution into Peter’s super account so that his super grows and they can benefit from the spouse contribution offset.

Scenario 1

Peter is not working and earns no income.

If Stana contributes $3,000 into Peter’s super account, she is eligible to receive a $540 tax offset.

18% x contribution amount

= 18% x $3,000

= $540

If Stana contributes $2,000 into Peter’s super account, she is eligible to receive a $360 tax offset.

18% x contribution amount

= 18% x $2,000

= $360

If Stana contributes $5,000 into Peter’s super account, she will only receive a $540 tax offset, as the offset applies up to a maximum contribution of $3,000.

Scenario 2

Peter works part-time and has an assessable income of $38,200.

This is a slightly more complicated scenario. If Stana contributes $3,000 after tax into Peter’s super account, she is eligible to claim a tax offset for the calculation that results in the lesser amount:

18% x contribution amount

= 18% x $3,000

= $540

or

18% x [contribution – (Spouse salary – low income threshold)]

=18% x [$3,000 – ($38,200 – $37,000)]

=18% x [$3,000-$1,200]

=$324

Therefore, Stana can claim a tax offset of $324.

Next in the Super Strategies Series: 

Maximising concessional contributions

General disclaimer

This content is intended only to provide a summary and general overview of the subject matter covered. It is not intended to be comprehensive nor does it constitute advice. We attempt to ensure that the content is accurate and current but we do not warrant the content nor its currency. You should seek professional advice before acting or relying on any of the content.

How can we help?
If you’d like to know more, please call us on 1300 623 936 to arrange a time to meet and we can discuss your particular requirements in more detail.

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