If your spouse (husband, wife, de facto or same-sex partner) is a low-income earner or not working at the moment, chances are they’re accumulating little or no super at all to fund their retirement.
The good news is, if you want to help them by putting money into their super, you might be eligible for a tax offset, while potentially creating additional future planning opportunities for both of you.
How do I know if I’m eligible?
To be entitled to the spouse contributions tax offset, eligibility rules include:
- you need to make an after-tax contribution to your spouse’s super account
- 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 (inclusive) they must meet work test requirements
- 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.
What are the actual tax benefits?
If the above criteria are met, you can generally make after-tax contributions to your spouse’s super fund and claim an 18% tax offset on up to $3,000.
To be eligible for the maximum tax rebate, 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 tax offset. However, once their income reaches $40,000, you’ll no longer be eligible, but can still make contributions on their behalf.
Also note, what you contribute will count towards your partner’s non-concessional contributions cap, which is the maximum amount that can be put into super after tax.
The after-tax contributions cap is $100,000 per year. And, for those under 65, it’s possible to contribute up to three years’ worth of annual caps ($300,000) in one year under the bring-forward rules.
Another thing to note is that after-tax contributions can’t be made once someone’s super balance reaches $1.6 million or above as at 30 June of the previous financial year. So, you won’t be able to make a spouse contribution should your partner’s balance have reached that amount.
What about contributions splitting?
Another way to increase your partner’s super is by splitting up to 85% of your before-tax super contributions with them, which you either made or received in the previous financial year.
Before-tax super contributions can include employer and or salary-sacrifice contributions, as well as personal tax-deductible contributions.
To be eligible for ‘contributions splitting’, your partner must be less than their preservation age, or between their preservation age and 65 (and not retired).
If you’re not sure what your partner’s preservation is, you can check out the table below.
|Date of birth||Preservation age|
|Before 1 July 1960||55|
|1 July 1960 – 30 June 1961||56|
|1 July 1961 – 30 June 1962||57|
|1 July 1962 – 30 June 1963||58|
|1 July 1963 – 30 June 1964||59|
|From 1 July 1964||60|
Amounts that you split between your and your partner’s super will be counted toward your concessional contributions cap, which is the maximum amount that can be put into super before tax. The limit is $25,000 per year.
You’ll need to talk to your super fund to find out whether it offers contributions splitting, and it’s also worth asking whether there might be any fees payable. If you’re an AMP customer and would like to set this up, type in ‘contributions splitting’ into the search bar on our Find a form page.
What my partner and I should know
- If either of you exceed super contribution limits, additional tax and penalties may apply.
- The value of your partner’s investment in super, like yours, can go up and down, so before making contributions, make sure you both understand risks tied to your investment options.
- The government sets general rules about when people can access their super. This means if either of you want to be able to use your super money, typically you’ll need to have reached your preservation age.
- While you can’t personally make further after-tax contributions into your super once you have a total super balance of $1.6 million or above (as at 30 June of the previous financial year), it’s possible to still make contributions to your partner’s super (noting the caps).
Where to go for more information
Your circumstances and retirement goals will play a big part in what you both decide to do. And, as the rules around spouse contributions and contributions splitting can be complex, it’s a good idea to chat to your adviser to ensure the approach you and your partner take is the right one.
If you don’t have an adviser, but would like a bit more information on the topic, you can call us on 131 267 or use our find an adviser search engine to locate an adviser near you.
In addition, you may want to:
See how you can contribute to your super
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