Spouse contributions were introduced by the Government as a means of building superannuation assets for people who had been out of the workforce for an extended period. Simply, the regulations allow you to make a contribution into superannuation on behalf of your spouse.
Contributions on behalf of a spouse under 65 may be made regardless of the spouse’s employment status, but once the spouse is 65 they must be gainfully employed on at least a part-time basis during the financial year. For this purpose a person is gainfully employed on a part-time basis if they have worked at least 40 hours in a period of not more than 30 consecutive days in that financial year.
The eligible spouse contributions made to your spouse’s superannuation account are treated as a non-concessional contribution (with the amount counted towards the receiving spouses cap limits) and with the amount attributed to the tax-free component. This means that they are not subject to the 15% contributions tax that applies to concessional contributions. Therefore, the full value of the contribution is invested for your spouse’s retirement.
Tax offset for spouse contributions
You may be able to claim an 18% tax offset on superannuation contributions of up to $3,000 you make on behalf of your non-working or low income-earning spouse.
You may be entitled to a tax offset of up to $540 on superannuation (maximum) each financial year if:
- you did not claim a tax deduction for the contributions
- both you and your spouse were Australian residents when the contributions were made
- at the time of making the contributions you and your spouse were not living separately and apart on a permanent basis, and
- the sum of your spouse’s assessable income and total reportable fringe benefits for the financial year was less than $13,800, and
- the contribution is made to a superannuation fund. The fund must be a complying fund for the income year in which you make the contribution.
A spouse includes a person who, although not legally married to you, lives with you on a genuine domestic basis as your husband or wife. It does not include a person to whom you are married but who lives separately and apart from you on a permanent basis.
The offset will not be available until you complete your annual tax return.
There is no limit on the amount of money that you can invest in your spouse’s superannuation account, however if you exceed the non concessional contribution cap then tax may be payable on the contribution. While the tax offset is calculated on amounts of $3,000 or less, you may contribute more than this if you wish. Spouse contributions are non-concessional contributions and as such are subject to the non-concessional contributions cap. For more information, please don't hesitate to contact us at Acorn Financial Services.