Spouse Super Contributions – What Are the Benefits?

When your partner isn’t earning much, or is out of work, their super might not be growing enough to support them in retirement. By contributing to their super, you may not only help them but also enjoy some tax benefits yourself.

We’ll explore how the spouse contributions tax offset works and how it differs from contribution splitting.

The Spouse Contributions Tax Offset

Are You Eligible?

To be entitled to the spouse contributions tax offset:

• You need to make a non-concessional contribution to your spouse’s super (after-tax money with no deduction claimed).

• You must be married or in a de facto relationship, and not living separately.

• You must both be Australian residents.

• Your spouse’s income must be $37,000 or less for the full offset, and under $40,000 for a partial offset.

• Your spouse must be under 75 years old, with a super balance under $1.9 million (as at 30 June 2024).

What Are the Financial Benefits?

If eligible, you can contribute to your spouse’s super and claim an 18% tax offset on up to $3,000 through your tax return.

To receive the maximum offset of $540, you need to:

• Contribute at least $3,000, and

• Your spouse’s income must be $37,000 or less.

Once their income exceeds $40,000, you’re no longer eligible for the offset — but you can still contribute.

Are There Limits to What Can Be Contributed?

• You can’t exceed your partner’s non-concessional contributions cap ($120,000/year).

• If your partner is under 75 and eligible, they may trigger the bring-forward rule, allowing up to $360,000 over three years.

• No non-concessional contributions can be made if their super balance is $1.9 million or more as at 30 June 2024.

• If their balance exceeds $1.66 million, the bring-forward rule may be limited.

How Contribution Splitting Differs

Another way to increase your partner’s super is by splitting concessional contributions — up to 85% of the amount you contributed in the previous financial year.

This includes:

• Employer contributions

• Salary-sacrifice amounts

• Voluntary contributions claimed as a tax deduction

What Rules Apply?

Your partner must be:

• Between age 60 and 65, and

• Not retired

Contribution Limits

• Split amounts count toward your concessional contributions cap ($30,000/year).

• If your total super balance was under $500,000 at 30 June of the previous year, you may also use unused concessional cap amounts from the last 5 years.

Do All Super Funds Allow This?

You’ll need to check with your super fund to confirm if they allow contribution splitting, and whether any fees apply.

What Else You and Your Partner Should Know

• If either of you exceeds your contribution caps, extra tax and penalties may apply.

• Superannuation is an investment, and its value can go up or down. Understand the risks before contributing.

• You generally can’t access super until you’re age 60 and retired.

• Even if your own super balance exceeds $1.9 million, you may still contribute to your partner’s super — within the cap rules.

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 contribution splitting can be complex, it’s a good idea to speak to your financial adviser to ensure your approach is the right one.

Source: AMP