If your partner either earns less than you or is not currently working, they may be adding little or nothing to their super. The good news? If you’re married or in a permanent de facto relationship, you may be able to help grow their super in a way that can benefit both of you.
If you make an after-tax super contribution into your spouse’s super, you may be eligible for a tax offset of up to $540 and help reduce your tax payable. Here’s how spouse contributions work.
Who can make and receive spouse contributions?
You must be married or in a de factor relationship with your partner to make super contributions on their behalf. You must also both be Australian residents.
To be eligible for the full tax offset amount, your partner must have income of $37,000 p.a.1 or less, and you must contribute $3,000 or more into your spouse’s super. A lower tax offset may be available if you contribute less than $3,000 or your spouse earns between $37,000 and $40,000 p.a.
Stephen and Tracy are married and have two young children. Stephen works full-time and earns $100,000 p.a. Tracy has cut back to working two days a week and earns $32,000 p.a.
They want to make sure Tracy keeps building her super while she is working part-time. Stephen contributes $3,000 into Tracy’s super account. This entitles him to a tax offset of $540, which will reduce his income tax when he completes his tax return for the financial year.
Important things to consider
Spouse contributions count towards the receiving spouse’s non-concessional contributions cap (NCC cap) and penalties may apply if the cap is exceeded. The rules that relate to the NCC cap are complex. You can find out more about them on our website and on the Australian Taxation Office (ATO) website.
To receive a spouse contribution in 2022/23, your spouse’s total super balance must be under $1.7 million on 30 June 2022. They must also be eligible to receive spouse contributions. It’s important to remember that the offset won’t apply if your spouse exceeds the non-concessional contributions cap for the relevant year, or if your spouse has a total super balance over the general transfer balance cap of $1.7 million.
Your spouse must be eligible to have the contribution made to superannuation which may include age test requirements – see the ATO website for more information.
More ways to grow your super
Discover more ways you and your partner can add to your super, such as other contribution types. Or find out ways to claim a benefit, such as a tax deduction or the government co-contribution.
Did you know?
Another option for boosting your spouse’s super balance is to split eligible concessional (before-tax) contributions from your account to your spouse’s. This is referred to as contribution splitting. These generally include the Superannuation Guarantee, salary sacrifice contributions and personal contributions for which you claim a tax deduction.
We’re here to help
Before making a contribution to your spouse’s super, you should consider your and your partner’s financial circumstances, contribution caps, and tax issues. Salary sacrifice may affect some government benefits and employee benefits. You should consider getting financial advice before deciding if spouse contribution arrangements are right for you and your partner.
A financial adviser can help you identify ways to grow your super. So, start the conversation to see how a financial adviser can help you. If you don’t have one, give us a call and we can help you find one near you.
Ready to make a spouse contribution?
Adding to your and spouse’s super now can mean more at retirement. Consider the Concessional Contribution and Non-Concessional Contribution caps before contributing so that you don’t end up paying more tax than you need. Also, make sure you are eligible to contribute before making a contribution.
1 Includes assessable income, reportable fringe benefits and reportable employer super contributions.
Important information and disclaimer
This article has been prepared by NULIS Nominees (Australia) Limited ABN 80 008 515 633 AFSL 236465 (NULIS) as trustee of the MLC Super Fund ABN 70 732 426 024. NULIS is part of the group of companies comprising Insignia Financial Ltd ABN 49 100 103 722 and its related bodies corporate (‘Insignia Financial Group’). The information in this article is current as at September 2022 and may be subject to change. This information may constitute general advice. The information in this article is general in nature and does not take into account your personal objectives, financial situation or needs. You should consider obtaining independent advice before making any financial decisions based on this information. You should not rely on this article to determine your personal tax obligations. Please consult a registered tax agent for this purpose. Opinions constitute our judgement at the time of issue. The case study examples (if any) provided in this article have been included for illustrative purposes only and should not be relied upon for decision making. Subject to terms implied by law and which cannot be excluded, neither NULIS nor any member of the Insignia Financial Group accept responsibility for any loss or liability incurred by you in respect of any error, omission or misrepresentation in the information in this communication.