The spouse contributions tax offset
If your other half is a stay-at-home parent, working part-time or out of work, find out how adding to their super could benefit you both financially.
If your spouse (husband, wife or de facto) 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’d like 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.
If you want to know more, we explain how the spouse contributions tax offset works, in addition to what contributions splitting is (and how it differs).
How do you know if you’re eligible?
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
- you must both be Australian residents
- the receiving spouse has to be under the age of 67, or if they’re between 67 and 74 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.
What are the actual benefits?
If 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.
Are there limits to what can be contributed?
You can’t contribute more than your partner’s non-concessional contributions cap, which is $100,000 per year for everyone. However, if your partner is under 65, they may be able to contribute up to three financial years of this cap in the one year (under bring-forward rules) which would allow a maximum contribution of up to $300,000.
Another thing to be aware of is that non-concessional 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 if your partner’s balance reaches that amount.
How contributions splitting differs
Another way to increase your partner’s super is by splitting up to 85% of your concessional super contributions with them, which you either made or received in the previous financial year. Concessional super contributions can include employer and or salary-sacrifice contributions, as well as contributions you may have claimed as a personal tax deduction.
What rules apply?
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, check 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|
Are there limits to what can be contributed?
Amounts that you split from your super into your partner’s super will count toward your concessional contributions cap, which is $25,000 per year.
Do all super funds allow for this type of arrangement?
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 are any fees. If you’re an AMP client and would like to set this up, type ‘contributions splitting’ into the search bar on our Find a form page.
What else you and your partner should know
- If either of you exceeds the super contribution caps, 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 any potential risks
- The government sets rules about when you can access your super. Generally, you can access it when you’ve reached your preservation age (which will be between the ages of 55 and 60 depending on when you were born) and you retire.
- While you can’t personally make further non-concessional 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 still possible to make contributions to your partner’s super (noting the caps).
Where to go for more information
Your circumstances 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 some advice, you can call AMP on 131 267 or use our find an adviser search function. For further insights, read about other ways you can contribute to super.
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