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Topping up your spouse’s super account is a great way to build the nest egg you both share and enjoy during your retirement years.
What’s more, you may be able to save yourself some tax in the process.
If you’re looking for easy ways to boost your spouse’s super balance, check out SuperGuide’s simple explanation of two ways to do it:
1. Make a spouse contribution, get a tax offset
One of the easiest ways to boost your spouse’s retirement savings is to make a non-concessional (after-tax) contribution directly into your spouse’s super account.
Spouse contributions not only top up your spouse’s super account; they also provide you with a financial benefit – provided you meet certain eligibility criteria.
Making a spouse contribution could mean you earn a spouse contribution tax offset you can claim against your tax bill for the financial year in which you make the contribution.
Who is eligible to receive a spouse contribution?
To make a spouse contribution, your spouse (sometimes called the receiving spouse) must:
- Not have exceeded their annual non-concessional contributions cap ($110,000 in 2021–22) in the financial year you make the contribution into their account. (From 1 July 2017 to 30 June 2021, the annual general non-concessional contributions cap was $100,000.)
- Have a Total Super Balance (TSB) of less than $1.7 million on 30 June in the financial year before the contribution was made. (From 1 July 2017 to 30 June 2021, the TSB limit for spouse contributions was $1.6 million.)
- Be under age 75 (once your spouse turns 75, you can no longer make contributions on their behalf).
- Have met the work test or work test exemption rules if they are aged 67 or over. For more information, read SuperGuide article Work test: Making super contributions over 67.
What is the spouse contribution tax offset?
If you decide to contribute to your spouse’s super account, you may be eligible to receive a tax offset of up to $540 on your annual tax bill.
To receive the spouse tax offset, you need to meet all the qualifying criteria:
- Your spouse’s assessable income*, total reportable fringe benefits and reportable employer super contributions must be under the threshold ($40,000 in 2021–22)
- Your contribution must not be tax deductible to you
- Your contribution must have been made into a complying super fund
- You and your spouse must both be Australian residents when the contributions were made
- You and your spouse must be living together on a permanent basis.
*Any First Home Super Saver (FHSS) scheme release amounts are not counted.
How big will my spouse tax offset be?
Depending on your spouse’s income and the amount you contribute into his or her account, you may receive a tax offset of up to $540 in your annual income tax return.
If you meet all the eligibility conditions, you could receive a tax offset of up to $540.
|Annual income for receiving spouse||Your tax offset|
|Less than the low-income threshold of $37,000||Up to a full tax offset of $540 (actual amount is calculated as 18% of the lesser of $3,000 and your total contributions for your spouse)|
|Between $37,000 and the cut-off threshold of $40,000||Offset amount is reduced by every $1 the receiving spouse’s income is over the low-income threshold|
|More than $40,000||Nil|
* To calculate your actual tax offset, the ATO has a simple worksheet available on its website here.
There is no limit to the amount you can contribute to your spouse’s account, provided your contributions do not exceed your spouse’s non-concessional (after-tax) contributions cap, but the tax offset is only available on the first $3,000 of contributions.
2. Split your super contributions
Another way to boost your spouse’s super account balance is to split the concessional contributions made into your own super account and transfer some of them into your spouse’s account.
This can be a good way to equalise your super account balances if your spouse has less in their account, or if they are on a lower income and receiving lower SG contributions. It may also help you if your spouse is younger than you and transferring your contributions into their account will help you qualify for a higher Age Pension.
Who is eligible to use contribution splitting?
If you want to split your super contributions with your spouse, the receiving spouse must be either under their preservation age, or aged between their preservation age and 65, and not retired.
Under the rules for contribution splitting, a spouse is a person of any gender you:
- Are legally married to
- Are in a registered relationship with under certain state or territory laws
- Live with on a genuine domestic basis in a relationship as a couple (a de facto spouse).
In addition, you must both be Australian residents when the contribution is made and must not be living separately on a permanent basis.
What super contributions can be split?
You can ask your super fund to transfer up to 85% of your taxed splittable contributions from a particular financial year into your spouse’s super account.
Taxed splittable contributions are generally any employer contributions (including salary-sacrifice contributions) and any personal super contributions you have claimed as a tax deduction in your income tax return.
Members of public sector super funds are also permitted to split their untaxed splittable employer contributions with their spouse, but not all these funds permit contribution splitting, so check with your fund before applying.
Contributions that cannot be split with your spouse generally include:
- Personal contributions for which you can’t claim a tax deduction
- Contributions made by your spouse to your super account
- First Home Super Saver Scheme and downsizer contributions
- Government co-contributions and LISTO contributions
- Contributions with a CGT cap election for small business
- Contributions made for you if you are aged under 18 unless they are from your employer
- Transfers and allocations from foreign funds and reserves
- Rollover super benefits
- Temporary resident contributions
- Super benefits subject to a payment split due to a relationship breakdown.
When can I apply to split my contributions?
Applications to split your super contributions with your spouse can be made immediately after the financial year in which the contributions were made. For example, if you want to apply to split some of your super contributions from 2020–21, the contributions must have been made into your super account before 30 June 2021.
You can only apply to split contributions in the same financial year if your entire super benefit is being withdrawn before the end of that year as a rollover, transfer, or lump sum benefit.
You cannot apply to split your contributions if:
- The amount you ask to split is more than the maximum allowed
- Your spouse is aged 65 or over
- Your spouse has reached their preservation age and is retired.
4 things to check before applying to split your super contribution
- Check whether your super fund offers contribution splitting, as not all super funds permit it.
- Check which application form you need to complete for contribution splitting. Some funds use the ATO’s Superannuation contributions splitting application form, while others have their own application form.
- Confirm whether your super fund charges a fee for splitting a super contribution to recover the costs involved for the fund.
- Ensure you lodge the ATO’s Notice of intent to claim or vary a deduction for personal super contributions form before you apply to split your contribution if you intend to claim a tax deduction for a personal super contribution.