If your spouse is a stay at home parent, working part-time or out of work, adding to their super could benefit you both financially.
If your spouse (husband, wife, de-facto or same-sex partner) is a low income earner or not working at present, chances are they’re accumulating little or no super at all to their retirement fund.
The good news is, if you help by contributing some of your own money to their super, you could be eligible to receive a tax rebate. And, with the newly implemented super rules as of this financial year, this tax advantage will be accessible to even more people.
To be entitled to the spouse contributions tax offset:
If your partner has no source of income or is a low-income earner, you can make after-tax contributions to their super fund and claim an 18% tax offset on up to $3,000.
To be eligible for the maximum tax rebate, 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 $40,000, you’re still eligible for a partial tax offset. However, once their income reaches $40,000, you’ll no longer be eligible, but can still make contributions on their behalf.
Also note, what you contribute will count towards your partner’s non-concessional contributions cap (the maximum amount that can be put into super after tax). The current limit is $100,000 per year.
Another way you can contribute to your partner’s super is by splitting up to 85% of your before-tax super contributions, such as employer and or salary sacrifice contributions, as well as personal tax deductible contributions, which you received in the previous financial year.
To be eligible for before-tax ‘contributions splitting’, your partner must be under 65 and still working.
Amounts that you split between your and your partner’s super will also be counted against your before-tax (concessional) contributions cap.
Currently the before-tax contributions cap is $25,000 per year for everyone, irrespective of age.
Start a conversation with us today about how the new super changes could impact you and what opportunities you may be able to take advantage of going forward.
Meanwhile, your circumstances and retirement goals will play a big part in the strategy you opt for. And, as the rules around spouse contributions and contributions splitting can be complex, it’s a good idea to chat to us to ensure the approach you and your partner take is the right one.
You need to consider with your financial planner (or adviser), your objectives, financial situation and your particular needs prior to making an investment decision. Sensibly Pty Ltd and its authorised representatives (or credit representatives) do not accept liability for any errors or omissions of information supplied on this website
Nick Shanley, Steve May, Luke Styles and Shanley Financial Planning T/A Steve May Financial Services are Authorised Representatives / Corporate Authorised Representative of Sensibly Pty Ltd, AFSL 533923. Please refer to our website at www.stevemayfs.com.au to reference our Financial Services Guides.
Shanley Financial Planning Pty Ltd trading as Steve May Financial Services (ABN 19 612 825 180) is a Corporate Authorised Representative of (1265706) of Sensibly Pty Ltd (AFSL 533923)
Nick Shanley, Steve May and Luke Styles are Authorised Representatives of Sensibly Pty Ltd (AFSL 533923)