Spouse super contributions – what are the benefits?

If your partner is a low-income earner, working part-time, or currently unemployed, adding to their super could benefit you both financially.

Your partner might be accumulating little or no super at all to fund their retirement if they’re not a big-income earner, or they’re out of work or working less hours.

If you’d like to help them by putting money into their super, you might be eligible for a tax offset, while potentially creating additional opportunities for both of you.

Below we explain how the spouse contributions tax offset works, in addition to what contributions splitting is and how the two differ.

The spouse contributions tax offset

Are you eligible?

To be entitled to the spouse contributions tax offset:

• You must make a non-concessional contribution to your spouse’s super. This is a voluntary contribution made using after-tax dollars, which you don’t claim a tax deduction for

• You must be married or in a de facto relationship.

• You must both be Australian residents.

• The receiving spouse’s income must be $37,000 or less for you to qualify for the full tax offset and less than $40,000 for you to receive a partial tax offset.

What are the financial benefits?

If eligible, you can generally make a contribution to your spouse’s super fund and claim an 18% tax offset on up to $3,000 through your tax return.

To be eligible for the maximum tax offset, which works out to be $540, you need to contribute a minimum of $3,000 and your partner’s annual income needs to be $37,000 or less. If their income exceeds $37,000, you’re still eligible for a partial offset. However, once their income reaches $40,000, you’ll no longer be eligible for any offset, but can still make contributions on their behalf.

Are there limits to what can be contributed?

You can’t contribute more than your partner’s non-concessional contributions cap, which is $110,000 per year for everyone, noting any non-concessional contributions your partner may have already made.

However, if your partner is under 75 and eligible, they (or you) may be able to make up to three years of non-concessional contributions in a single income year, under bring-forward rules, which would allow a maximum contribution of up to $330,000.

Another thing to be aware of is that non-concessional contributions can’t be made once someone’s super balance reaches $1.9 million or above as at 30 June 2023. So you won’t be able to make a spouse contribution if your partner’s balance reaches that amount. There are also restrictions on the ability to trigger bring-forward rules for certain people with large super balances (more than $1.68 million as at 30 June 2023).

There are also different super balance limits in place if you want to take advantage of the bring-forward rules. See our page on super bring-forward rules to find out more.

How contributions splitting differs

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.

What rules apply?

To be eligible for contributions splitting, your partner must be under their preservation age, or between their preservation age and 65 (and not retired). If you’re not sure what your partner’s preservation age is, check the table below.
 

Are there limits to how much can be contributed?

Amounts you split from your super into your partner’s super will count toward your concessional contributions cap, which is $27,500 per year for everyone.

On top of this, unused cap amounts accrued since 1 July 2018 can also be contributed, if they’re eligible. Note, this broadly applies to people whose total super balance was less than $500,000 on 30 June of the previous financial year.

Do all super funds allow for this type of arrangement?

You’ll need to talk to your super fund to find out whether it offers contributions splitting – or speak to us – and it’s also worth asking whether there are any fees. 

What else you and your partner should know

• If either of you exceeds super contribution caps, additional tax and penalties may apply.

• The value of your partner’s investment in super, like yours, can go up and down, so before making contributions, make sure you both understand any potential risks.

• The government sets rules about when you can access your super. Generally, you can access it when you’ve reached your preservation age (which will be between the ages of 55 and 60 depending on when you were born) and retire.

• While you can’t personally make further non-concessional contributions into your super once you have a total super balance of $1.9 million or above (as at 30 June of the previous financial year), it’s still possible to make contributions to your partner’s super (noting the caps).

Contact us to find out more.

Source: AMP July 2023

Important information

Any advice and information is provided by AWM Services Pty Ltd ABN 15 139 353 496, AFSL No. 366121 (AWM Services) and is general in nature only. It doesn’t consider your personal goals, financial situation or needs. It’s important you consider the appropriateness of any advice and read the relevant Product Disclosure Statement and Target Market Determination available at amp.com.au before deciding what’s right for you. Taxation issues are complex. You should seek professional advice before deciding to act on any information.

The super coaching session is a super health check and is provided by AWM Services and is general advice only. It does not consider your personal circumstances.

You can read our Financial Services Guide online for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relation to products and services it provides. You can also ask us for a hard copy. All information on this website is subject to change without notice. AWM Services is part of the AMP group and can be contacted on 131 267 or askamp@amp.com.au.