What are spouse super contributions and contributions splitting?

If your spouse is out of work, on a low income, or choosing to be a stay-at-home parent or carer, their ability to build a retirement nest egg is limited. The good news is that you can use your after-tax income or your own super contributions to help boost their super, whilst potentially benefiting from a tax rebate. 

The two key strategies that allow for this are spouse super contributions and spouse contribution splitting.

 

Spouse super contributions

Spouse contributions allow you to make an after-tax – or non-concessional – contribution from your own money to your spouse’s super account.

To do this, your spouse must be aged under 67, or meet the work test or work test exemption if they are aged 67 to 74. You must also both be Australian citizens and living together.

Key advantages of making contributions to your spouse’s superannuation

1. Boost the retirement savings of your spouse

If your spouse is earning a low income, or has taken time off work, by making an after-tax contribution to their super account you’re helping them boost their retirement savings.

This may be a more effective way to increase superannuation savings if you (the contributing spouse) have reached your superannuation contribution caps for the financial year (as the contributions count towards the receiving spouse’s contributions cap). 

You will need to make sure that you’re not exceeding superannuation contribution caps for your spouse, by making a spouse contribution. If you exceed the caps for your spouse, or yourself, you may be required to pay more tax. Please refer to the ATO website for current information on contributions caps.

2. Pay less tax

If you make after-tax contributions to your spouse's super and they earn less than $40,000 a year, you may be able to claim a tax offset of up to $540.  

How to make a super contribution to your spouse’s super 

Spouse contributions can generally be made by transferring funds from your bank account to your spouse’s super account. 

Super funds may offer different ways of doing this, however, generally this can be done as a direct transfer or BPAY payment, ensuring that you follow the instructions specified by your fund.

If you are a BT Super or BT Super for Life member, you can find instructions on making contributions to your spouse’s super, or your own super, on our 'Top up my super' page.

These contributions can be set up as regular payments via online banking. 

How does the tax offset work?

If you contribute to your spouse’s super – and they earn less than $37,000 – then you can potentially claim an 18% tax offset on a contribution of up to $3,000. This makes the maximum tax offset $540. While you can contribute more than this, there is no offset on any amounts above $3,000. To receive the offset you need to make the contribution using after-tax dollars where you haven’t claimed a tax deduction.

The tax offset progressively reduces if your spouse’s income is above $37,000 and is completely phased out when their income reaches $40,000. 

Eligibility for tax offset:

  • Eligible spouse contributions must be made to a complying super fund on behalf of a spouse.
  • Both spouses are Australian tax-residents (and not permanently living apart).
  • The receiving spouse:
    • was under age 75 when the contributions were made
    • must not have exceeded their non-concessional contributions cap for the financial year
    • must have a total super balance less than the general transfer balance cap ($1.7m in 2021/22) on 30 June of the prior financial year. Total super balance is the sum of all the balances of super and/or pension accounts
    • had an income (assessable income, reportable fringe benefits and reportable employer super contributions) less than $40,000 in the financial year the contribution is made.

You can find out what your tax offset may be at the ATO website.

How to claim the tax offset

To claim the spouse contribution tax offset, you need to lodge your tax return for the relevant financial year and complete the ‘superannuation contributions on behalf of your spouses’ question in the supplementary section of your paper tax return or via myTax. The spouse details are also required to be completed in the relevant section of the tax return. 

What is the definition of a spouse?

Your spouse can be a person of any gender who is either:

  • Your legally married partner with whom you live; or
  • Your de facto partner, that is, the person with whom you are not married but live with on a genuine domestic basis in a relationship as a couple.

If you are legally married to someone but live separately and apart on a permanent basis, then that person is not considered to be your spouse.

Super contribution splitting

Another way to help boost your partner’s super balance is through transferring up to 85% of your own concessional – or before-tax – super contributions you’ve made to your fund, to your partner’s super account – a strategy known as contribution splitting. 

Unlike spouse contributions which involve the payment of your own funds directly to your spouse’s super account, contribution splitting involves the transfer of a portion of the contributions made to your super account to your spouse’s super account. 

Contributions that can be split generally include your employer’s Superannuation Guarantee contributions, salary sacrifice contributions and personal after-tax contributions for which you’ve claimed a tax deduction. The contributions need to have been made or received in the previous financial year.

Note that you cannot boost your spouse’s super by splitting any of your after-tax super contributions, other than those for which you’ve claimed a tax deduction.

How does super contribution splitting work?

The strategy works by asking your super fund to transfer up to 85% of your concessional contributions into your spouse’s super account. Your spouse must be either under their preservation age, regardless of whether they are working or not, or aged between their preservation age and 65, and not yet retired. 

If you want to take advantage of this strategy, your super contributions can only be split in the financial year immediately after the year in which the contributions were made. However, you can apply to split them in the same financial year as the contributions were made, if your entire benefit is being withdrawn before the end of the financial year as a rollover, transfer, lump sum or a combination of these.

What you need to know

Amounts that you split from your super into your spouse’s super account do not reduce the amount counted towards your concessional contributions cap, which for the 2021-22 financial year is $27,500. Also, the split super contributions remain preserved until your spouse reaches their preservation age.

You also cannot split your super contributions if your spouse is aged 65 or over; if they’ve reached their preservation age and retired; or if the amount you want to split is more than the maximum allowed.

Key advantages of splitting contributions to your spouse’s superannuation

  1. By splitting your concessional contributions with a spouse who is older than you, your spouse may be able to access their super benefits earlier.  
  2. If your spouse is younger than you, splitting your concessional contributions with them may enable you to access a greater age pension entitlement.
  3. Splitting allows you to better manage tax if you or your spouse want to draw a superannuation pension before age 60.

How to split your contributions with your spouse

If you want to split your super contributions with your spouse, you need to submit an application to your super fund. Not all super funds allow superannuation splitting, so contact your super fund first to check.

If you are a BT Super or BT Super for Life member, you can complete the Contributions Splitting Application form, available on our Documents & downloads page and return it to us either by post or email.

Post:

BT Super
GPO Box 3958
Sydney NSW 2001

Email:

superforms@btfinancialgroup.com

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Important information

This information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation, and needs.  Before making any decision to acquire the product you should obtain a Product Disclosure Statement relating to the product available on bt.com.au and consider the Statement. Up to date information on contributions caps is available on the ATO website at ato.gov.au