Making spouse contributions
If your partner is earning a low income or taking time off work for caring responsibilities, then it's likely they're not earning much super. This means that their super can fall behind, and it's a big problem in Australia.
Share the wealth by contributing to your spouse's super
Spouse contributions are contributions you make to your partners super from your after-tax income. Depending on how much your partner earns, adding to their super can help secure a brighter retirement for you both, and may save you some tax.
Below we explain how the spouse contributions tax offset works, what contributions splitting is and how the two differ.
The benefits of sharing
If you or your partner is a low-income earner or taking a break from work, the higher wage earner can make Spouse contributions to build their partner’s super savings.
Other benefits include:
- Spouse contributions are not taxed as long as they don’t exceed the non-concessional contributions cap ($110,000 for the 2021-2022 financial year)
- The contributor may be eligible for a tax rebate, provided the Spouse’s total income1 is less than $40,000 and certain other eligibility criteria have been satisfied
- Building your nest egg together.
The spouse contributions tax offset
If you contribute to your partner’s super, you might be eligible for a tax benefit.
The maximum tax rebate is 18% of a $3,000 contribution. That means you may be $540 better off.
The full tax rebate is available if your spouse’s income (including assessable income, total reportable fringe benefits amounts and reportable employer superannuation contributions) is less than $37,000 per year.
Tax offsets will not be available if the receiving spouse has exceeded their non-concessional contributions cap in the relevant financial year or they have a Total Super Balance* equal to or exceeding the transfer balance cap as of 30 June before the start of the financial year in which the contribution was made. The transfer balance cap for the 2021/22 financial year is $1,700,000.
Another way to increase your partner’s super is by splitting up to 85% of your concessional super contributions with them, which you either made or received in the previous financial year. Concessional super contributions can include employer and or salary-sacrifice contributions, as well as voluntary contributions you may have claimed a tax deduction for.
To be eligible for contributions splitting, your partner must be under their preservation age, or between their preservation age and 65 (and not retired).
Learn more about spouse contributions
For more information on eligibility criteria, please refer to the ATO website (www.ato.gov.au)
Questions about spouse contributions?
Speak to us about contributing to your spouse's super, to help you decide what's best for your situation.Get in touch
1 Including assessable income, total reportable fringe benefits amounts and reportable employer super contributions.
*Your total superannuation balance is the total value of your accumulation and retirement phase interests (including rollover amounts not yet included in those interests) across all your superannuation accounts, reduced by the sum of any structured settlement contributions.