Spousal Contributions To Superannuation – How *Do* They Work?

This is Canstar’s guide to the ins and outs of making contributions to your spouse’s superannuation, and how the professionals advise it could affect your tax affairs.

Members of both married and defacto relationships can make contributions to each other’s superannuation. Spousal superannuation contributions can often be an effective way for one spouse to both boost their partner’s super balance and potentially achieve certain tax outcomes, but the ATO has recently announced changes to the maximum tax offsets and relevant income thresholds that are worth considering.

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Why do people contribute to their spouse’s super?

Two reasons people make contributions to their spouse’s superannuation are:

  • they may receive a tax offset for doing so if they meet the requirements outlined by the Australian Taxation Office (ATO)
  • they earn more than their spouse, or simply want to give their super a boost

If you simply want to build your partner’s superannuation savings, the main thresholds you’ll need to keep in mind are the contributions cap, particularly the one for non-concessional contributions. However, if you’re interested in a tax offset for your contributions, there are some additional rules outlined by the ATO you need to know.

To view the past performance of all super funds, rated by Canstar, use our comparison tool:

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When am I eligible for a tax offset?

The ATO notes that you are generally only eligible for a tax offset based on your spousal contributions if the sum of your partner’s adjusted taxable income (ATI) – including their assessable income, total reportable fringe benefits, and reportable employer super contributions – is less than certain limits.

Prior to the 2017-18 financial year, to be entitled to a partial tax offset, your partner’s ATI needed to be less than $13,800 according to the ATO, and you were potentially eligible for the full offset of $540 if their ATI was $10,800 or less, and you had contributed at least $3,000 into their superannuation account.

However, according to the ATO, from the 2017-18 financial year and onward those figures have increased significantly. Under the current rules, you can potentially be eligible for an offset if your partner’s ATI is less than $40,000, and are likely to access the full offset of $540 if that figure is less than $37,000 and you’ve contributed at least $3,000 into their superannuation account.

Maximum partner income/benefits/contributions for full offset of $540 Maximum partner income/benefits/contributions to receive any offset
2016-17 $10,800 $13,800
2017-18 $37,000 $40,000

Source: Australian Taxation Office 

The ATO notes that additional criteria for receiving the tax offset are that:

  • your contributions were made to a super fund that was compliant during the relevant financial year(s)
  • you and your spouse were both Australian residents at the time of any and all contributions made
  • you and your spouse were not living separately or separated permanently at the time of any and all contributions made

Additionally, according to the ATO you are excluded from receiving the tax offset if:

  • your spouse has exceeded their non-concessional contributions cap for the financial year
  • your spouse’s super balance was $1.6 million or more on 30 June of the previous financial year in which the contribution was made
  • the contributions you made to your spouse’s super account were first made to your account and then split across to your spouse – that would be a rollover/transfer rather than a contribution

How do I calculate my tax offset?

As detailed above, the tax offset you may receive as a result of making contributions to your spouse’s super will vary depending on their ATI. As mentioned, the ATO advises that if the sum of their ATI is less than $37,000, you may be eligible for the full $540 offset. In cases where your spouse’s income is more than $37,000 but less than $40,000, the offset you may be eligible for will be whichever of these two figures is smaller:

  • 18% of total spouse contributions you’ve made in the financial year not exceeding $3,000
  • 18% of ($3000 – (spouse’s financial year income – $37,000))

The offset can only ever apply to a maximum of $3,000 in contributions – 18% of which is $540.

If you think you or your spouse could be with a super fund better for your personal circumstances, you can compare funds with Canstar to find the right fund for both of you.

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Canstar is not authorised or registered to provide tax advice. We recommend you seek advice from a qualified and registered (where applicable) professional adviser before making any financial or purchase decision.

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