Can I contribute to my spouse's superannuation fund?

Sometimes when you’re in a relationship you or your partner have to make career compromises to take care of the children or ageing parents. Other times, you or your partner may simply need some time off.

Unfortunately, time out of the workforce can have consequences for your retirement savings. To compensate for this, if you are married or in a de facto relationship, you can contribute to your spouse’s super fund. You may also qualify for a small tax offset if this contribution meets certain conditions. However, you may not be able to claim a tax offset if you are obliged under family law to split super contributions with your spouse.

How do I contribute to my spouse’s superannuation fund?

You can contribute to a super fund on behalf of your spouse if they are either unemployed or earning a low income. You may need to check whether their super fund is considered compliant with spousal contribution conditions by the Australia Tax Office (ATO).

Also, if you expect to get a spouse superannuation contribution tax offset, consider finding out whether you indeed qualify. Typically, you are eligible for this tax offset if your spouse’s taxable income is less than $40,000 annually. If your spouse has a salary sacrifice super contribution arrangement with their employer or receives any fringe benefits, these should be included in their taxable income.

You may not qualify for the tax offset if your spouse’s super fund balance was higher than $1.6 million on 30 June 2019. Also, if contributing to your spouse’s super fund qualifies you for a deduction in your income tax, you won’t be eligible for the tax offset.

You only get a tax offset for the first $3,000 you contribute. Therefore, the maximum tax offset you can receive is $540, which is 18 per cent of the allowed contribution of $3,000. The tax offset you can claim decreases as your spouse’s income nears the cut-off sum of $40,000.

Typically, this implies that you only get the maximum tax offset if your spouse earns $37,000 or less. However, suppose they earn $38,500, and you contribute $3,000. In this case, you can only claim 18 per cent of the amount exceeding $37,000 as your tax offset. You’d therefore receive a tax offset of $270. Consider reviewing the ATO’s myTax worksheet to understand how the tax offset varies with your spouse’s income.

How does superannuation spouse contribution splitting work?

Instead of directly depositing an amount to your spouse’s super fund, you can also choose to split your super fund contributions with your spouse. Suppose you’ve made a personal contribution to your super fund in the last financial year. You can apply to transfer a part of this contribution to your spouse’s account. However, you should confirm that your super fund offers this facility and, if so, at what cost. You may also need to find out how you can apply for splitting super contributions as different super funds may use different forms.

Remember that you may need to meet several criteria before you can transfer your super contributions. You can only apply for super contribution splitting once a year. You’ll need to inform your super fund in writing if you’re also claiming a deduction on the contribution you’re splitting. Your super fund may also set an upper limit on the super contribution you can split. If your spouse is older than 65 years or is retired, your super fund may not approve a super contribution split.  

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