Superannuation isn’t just about growing your own retirement savings—it can also be used strategically between partners. Spouse super contributions are a great way to boost your partner’s retirement savings while potentially securing a tax offset for yourself. Here’s what you need to know.
What is a Spouse Super Contribution?
A spouse contribution is a non-concessional (after-tax) contribution that one partner makes into their spouse’s super fund. This can be done as a one-off or ongoing strategy to help balance super balances, reduce tax, and optimise retirement planning.
Who Qualifies as a Spouse?
For the purpose of spouse contributions, a spouse includes:
- A person legally married to the contributor
- A de facto partner (same or opposite sex)
- A registered partner under state or territory law
Spouses must not be living separately on a permanent basis.
Why Make Spouse Contributions?
- Maximise Tax-Free Super Withdrawals – By balancing super balances between partners, both can benefit from tax-free withdrawals in retirement.
- Manage the Pension Transfer Balance Cap – Keeping super balances under the cap ensures more tax-free earnings.
- Earlier Access to Super – If one spouse can access super earlier, transferring funds to their account can provide financial flexibility.
- Super Protection for Social Security Purposes – Keeping assets in super (before Age Pension age) can help reduce assessable assets for Centrelink benefits.
- Tax Offset Benefits – Contributing to your spouse’s super can provide a tax offset of up to $540.
How to Make a Spouse Contribution
A spouse contribution is made as an after-tax payment into the receiving spouse’s super fund. This contribution must be identified as a spouse contribution to ensure it is correctly reported to the ATO.
To claim the spouse contributions tax offset, the contributing spouse needs to complete the relevant section in their tax return.
Eligibility for Spouse Contributions
Contributing Spouse Requirements
- Can be of any age
- Can have any super balance
- Must not claim a tax deduction for the contribution
Receiving Spouse Requirements
- Must be under age 75
- Must have a Total Superannuation Balance (TSB) below $1.9 million (as of 30 June of the previous financial year)
The work test no longer applies to spouse contributions. Contributions must be made before 28 days after the month in which the spouse turns 75.
Understanding the Tax Offset
If the receiving spouse earns less than $40,000 per year, the contributing spouse may be eligible for a tax offset of up to $540.
The tax offset is calculated as 18% of the lesser of:
- The spouse contribution (up to $3,000)
- $3,000 reduced by $1 for every $1 the receiving spouse’s income exceeds $37,000
Even if the receiving spouse has no personal exertion income, the offset can still apply.
Examples of Spouse Contributions in Action
Example 1: Maximising the Tax Offset
- Darryl earns $80,000 per year
- His spouse, Amanda, has retired and earns $20,000 in investment income
- Darryl contributes $3,000 to Amanda’s super
- Tax offset: $540 (18% of $3,000)
Example 2: Partial Tax Offset
- Alena earns $130,000 per year
- Her spouse, Alan, earns $39,000 per year
- Alena contributes $3,000 to Alan’s super
- Tax offset: $180, as Alan’s income reduces the eligible offset amount
Final Thoughts: Is This Strategy Right for You?
Spouse contributions can be a powerful tool for superannuation planning, offering tax benefits while strengthening your combined retirement savings.
If your spouse earns below $40,000 per year, this could be a smart move to optimise tax efficiency. Need help structuring your contributions? Reach out today for tailored advice.