Spouse Super Contributions
A spouse contribution involves making a contribution to a spouse’s super fund to build their retirement savings. By contributing to your spouse’s super, you can receive a tax offset and help to build your joint retirement savings.
What are the benefits?
- You may receive a non-refundable tax offset up to $540 for contributions made on behalf of a low income earning or non-working spouse.
- Boost the super balance of a spouse who has little or no super and grow your retirement savings as a couple.
- Accumulate wealth since earnings within super may be taxed at a lower rate than investments outside super.
Who can this strategy work for?
If your spouse is earning less than $40,000 for the financial year, you may be eligible to claim a tax offset for spouse contributions you make to them. To claim the tax offset for spouse contributions there are a few requirements:
- You and your spouse must be an Australian resident for tax purposes and not be living separately and apart on a permanent basis.
- Your spouse’s assessable income (plus reportable fringe benefits and reportable employer super contributions) must be less than $40,000 for the year.
- Your spouse has not exceeded their non-concessional contributions cap for the financial year.
- Your spouse’s total superannuation balance is less than $1.6 million.
- The contributions are made to a complying super fund.
- Your spouse is under the age of 70.
How does it work?
If your spouse’s assessable income (plus reportable fringe benefits and reportable employer super contributions) totals $37,000 or less, you could be eligible to reduce your tax by up to 18% on the first $3,000 of after-tax income you contribute into their super. This means you could be eligible to get $540 back on the $3,000 you contribute. This may not sound like much as a one-off, but over time it can grow to become a substantial saving. The tax offset decreases as your spouse’s income exceeds $37,000 and cuts off when their income reaches $40,000. This doesn’t mean you can no longer contribute; it just means you won’t receive a tax offset. Spouse contributions are not subject to the 15% contributions tax and they are tax-free on withdrawal.
Contributions you make on behalf of your spouse will count towards their non-concessional contributions cap.