If you are a member of a couple and looking to build your retirement capital then you might consider Superannuation Spouse Contributions.

Under the spouse contribution rules you may be eligible for a tax offset of up to $540 if you contribute $3,000 into your spouse’s complying superannuation fund.

The spouse must have an assessable income (including reportable fringe benefits) of less than $10,800 to get the full amount with a sliding reduction in the offset up to the $13,800 income level.

If you partner is deemed to earn between $10,800 and $13,800 then you can work out the potential tax offset as follows.

1. Deduct $10,800 from the spouse’s total assessable income and reportable fringe benefits.
2. Deduct this amount from $3,000.
3. Multiply this amount by 18%.

For example if your spouse earns $11,800 the results would be:

1. $11,800 – $10,800 = $1,000
2. $3,000 – $1,000 = $2,000
3. $2,000 x 18% = $360

In this example the offset would be $360.

Your partner can be your de facto and it applies to same sex couples too.

Why make Spouse Contributions?

  • You could pay up to $540 less tax.
  • Build up your partners superannuation capital to take advantage in the pension phase of two tax free thresholds – ie having your capital paid to the two of you could mean you pay less tax than if the the whole amount was in just one partners name.

Issues to consider

  • You need to have a good idea of what your spouse’s assessable income and reportable fringe benefits will be before you make the contribution to work out whether it is worthwhile.
  • Eligibility of your spouse due to income. See ATO for what income and fringe benefits are taken into account.
  • Entry fees if applicable on entry to their superannuation fund.
  • Ensure that the contribution is recorded as a spouse contribution by the super fund.
  • Ensure you claim the offset when you complete your tax return.
  • Access to the contributed funds is restricted according to normal superannuation rules.
  • Be aware that you can contribute more than $3,000 but there are maximum contribution caps on what are classified as ‘non concessional’ contributions.

This is a simple superannuation wealth building strategy but it may have unforseen ramifications due to your whole situation. It is advised that you consult with your financial planner and tax adviser before taking any action.

Disclaimer: Superannuation rules change regularly and occasionally retrospectively. Please seek appropriate advice from a professional tax adviser and or financial planner before taking any action.