Spouse super contributions: How do they work?

Spouse contributions could be one option if you’re looking to help boost your partner’s retirement savings in a tax-efficient way. Like many aspects of being in a relationship, this topic may seem, well, complicated. Canstar’s guide aims to simplify how it works.

What is a spouse super contribution?

A spouse super contribution is a contribution you make towards your partner’s retirement savings. If your spouse (married or de facto) is a low income earner (below $40,000 per year) or does not earn any income, you may be able to claim a tax offset on contributions of up to $3,000 per year that you make on their behalf using your after-tax salary, according to the Australian Taxation Office (ATO).

Depending on the amount of the contribution and your spouse’s income, this tax offset could be worth up to $540 per year, based on the ATO’s formula.

It’s important to remember that only after-tax contributions can be claimed as a tax offset, according to the ATO.

Another way you may be able to contribute to your partner’s super is using your pre-tax income. You can do this by splitting up to 85% of certain types of super contributions with your spouse, which could include employer contributions, salary sacrifice contributions you make and any after-tax contributions you make that you claim a tax deduction for.

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What are the benefits of spouse super contributions?

Potential benefits of making a spouse super contribution could include boosting your partner’s retirement savings and reducing your tax bill. As a hypothetical example, if your spouse’s income is reduced because they have taken time off work to care for your children, this could have an impact on their super contributions and ultimately their balance come retirement. By making spouse contributions on your partner’s behalf, you could help keep their balance growing while they are working less.

How to make a spouse super contribution

To make a spouse super contribution to your partner’s account, you would need to contact their super fund to find out how it accepts contributions. Some funds may have a deposit form with instructions on how to make a contribution to one of its members’ accounts. There may also be payment details on your spouse’s regular super statement. Depending on the fund, you may be able to contribute via bank transfer or through BPAY.

If you would like to split super money already held in your super account with your spouse, you will need to speak to your own fund for instructions on how to set up an arrangement making transfers to your spouse’s account.

How to claim your spouse contribution tax offset

To claim a spouse contribution tax offset, you will need to complete the ‘Spouse details’ section of your tax return form and indicate that you are claiming a tax offset, the ATO says. Then, under the ‘Superannuation contributions on behalf of your spouse’ heading section, you will be asked to provide details, such as your spouse’s assessable income and the total contributions you have paid.

Once completed, any offset you are eligible for will be calculated as part of your tax return.

According to the ATO, the super spouse contribution tax offset is calculated at a rate 18% of the lesser of:

• $3,000 minus any amount over $37,000 that your spouse earned
• the value of the spouse contributions

According to the ATO, the spouse super contribution tax offset is subject to a number of eligibility criteria, including:

• Both you and your spouse must have been Australian residents when the contributions were made.
• For you to receive the full tax offset for a financial year, your spouse can’t have earned more than a certain amount that year ($37,000, at the time of writing). You will not be eligible for the offset at all if they earned $40,000 or more.
• When making the contributions, you and your spouse must not be living separately and apart on a permanent basis.
• Your spouse must not have exceeded their non-concessional contributions cap for the current tax year.
• Your spouse’s super balance must not have exceeded the transfer balance cap at the end of the financial year that preceded the contribution.
• Your spouse must be under 75 years old when the contributions were made, and meet the work test requirements if they are between 67 and 74.

You can’t claim the tax offset for spouse super contributions that you make to your own fund, then split to your spouse, as the ATO considers this to be a transfer or rollover instead of a contribution for the purpose of assessing eligibility for a tax offset.

If you are looking for support with claiming a tax offset, you should speak to a qualified tax accountant. Or if you would like advice on how to maximise your and your spouse’s retirement savings, it may be worth speaking to a financial advisor.

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