EOFY Advice: Spouse Contributions

We hope you’ve found our End of Financial Year (EOFY) Advice series helpful in the lead up to 30 June. There are many opportunities to boost your super with voluntary contributions, to take advantage of potential tax-saving or co-contribution benefits available to eligible members. In this final instalment of our EOFY Advice series, we’re going to explain spouse contributions.

Do you have a spouse who is not working or is earning a low income?

If your spouse is either not working or earning a low income, it’s likely their super is significantly lower than your own. Women, in particular, face the challenge of achieving sufficient super for their retirement. In Australia, the average woman will retire with about half the balance in their super compared to a man due to factors such as lower income, career breaks to care for children and family, and working part time. You can help by making a spouse contribution, which is an effective way to boost their super, while also reducing the tax you need to pay.

How do spouse contributions work?

Under the 2018-19 tax rules, you may be able to claim an 18% tax offset of contributions into your spouse’s account up to $3,000 (maximum offset of $540).You may be eligible to claim the maximum tax offset of $540 if:

You contribute to the eligible super fund of your spouse, whether married or de-facto, and
Your spouse's income is $37,000 or less.

The tax offset amount starts to reduce if your spouse's income is greater than $37,000 and is not available if your spouse’s income if over $40,000. There are other conditions you need to satisfy to receive the offset. Visit the Australian Taxation Office (ATO) for more information.

How do we do it?

Two steps need to be taken to take advantage of this opportunity, should you and your spouse be eligible:

Firstly, make a normal personal contribution of up to $3,000 into the non-working spouse’s super account during the financial year.
Then, when the working spouse completes their tax return they need to elect that they “made contributions to a complying superannuation fund or a retirement savings account (RSA) on behalf of your spouse (married or de facto) who is earning a low income or not working”. Refer to the ATO website for details on how to complete this in your tax return.

A few things to be mindful of

The tax offset for eligible spouse contributions cannot be claimed for super contributions that you made into your own account, then split to your spouse. This is called a rollover or transfer, not a contribution. Spouse contributions will still count towards the receiving spouse’s concessional and non-concessional contributions caps, which must not exceed $25,000 per year or tax penalties will apply. If you need help with making a contribution into your spouse’s super account, our Member Care Team are happy to help. You can call the team on 1300 360 907 or email us at members@christiansuper.com.au. Disclaimer: The content of this article includes advice that is general in nature and does not consider your personal situation. Christian Super encourages all people considering their options in retirement planning to seek out qualified professionals who can provide specific personal advice.

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