Can I contribute to my spouse’s superannuation?

There are several compelling reasons to consider contributing to your spouse’s super:

• Balancing Super Balances: Traditionally, primary earners accumulate larger super balances. Spouse contributions help bridge this gap, ensuring a more balanced retirement income for both partners.
• Boosting for Lower Earners: Spouses with lower incomes or stay-at-home parents often have minimal super contributions from employers. Spouse contributions can significantly improve their retirement savings.
• Tax Advantages: You may be eligible for a tax offset of up to $540 per year by contributing to a spouse earning less than $40,000 annually.

Eligibility for Spouse Super Contributions

To contribute to your spouse’s super, you must meet the following criteria:

• Marital Status: You must be married or in a de facto relationship.
• Residency: Both you and your spouse must be Australian residents at the time of contribution.
• Spouse’s Age: Your spouse must be under 75 years old to receive spouse contributions.

Contribution Options:

There are two main ways to contribute to your spouse’s super:

1. Non-Concessional Contributions: These are after-tax contributions made directly to your spouse’s super fund. They count towards your spouse’s non-concessional contribution cap, which varies depending on their total super balance. However, you may be eligible for a tax offset on these contributions as explained below.
2. Contributions Splitting: If you have already made before-tax contributions to your own super, you can choose to split a portion (up to 85%) and roll it over to your spouse’s super. This option may be strategically advantageous if your spouse has a lower marginal tax rate.

Tax Benefits: Spouse Contribution Tax Offset

A significant advantage of spouse contributions is the potential tax offset. You can claim an 18% tax offset on contributions of up to $3,000 per year made to your spouse’s super, provided their income is below $40,000 annually. The offset amount gradually reduces as your spouse’s income increases, phasing out entirely at $40,000 or above.

Important Considerations:

Before contributing to your spouse’s super, consider the following:

• Your Financial Situation: Ensure you prioritize your own financial goals and debt repayment before making significant spouse contributions.
• Spouse’s Super Fund: Discuss contribution options with your spouse’s chosen super fund. Contribution limits and fees may vary.
• Tax Implications: Consult a tax professional to understand the specific tax implications for your situation, considering your and your spouse’s marginal tax rates.

Conclusion:

Contributing to your spouse’s super can be a strategic way to enhance their retirement savings and achieve greater financial equality within your partnership. By understanding the eligibility criteria, contribution options, and potential tax benefits, you can make informed decisions to boost your spouse’s super and secure a comfortable future for both of you. Remember, consulting a financial advisor can provide personalized guidance based on your specific circumstances.