Spouse & Contribution splitting
There are two ways you can add to your partner's super:
A Spouse Contribution is adding to your partner's super account from your own take-home pay. eg. You make a payment from your personal bank account to their super account.
Contribution Splitting is splitting some of the before-tax contributions which would go to your super account and diverting them to your spouse's account. eg: Your employer pays you mandatory Super Guarantee contributions, and you divert some of these to your spouse's account.
Sharing the benefits
The main advantage of adding to your super is to share the amount saved for retirement between two spouses. The benefits can include:
- tax advantages, including a tax offset;
- both members may get access to the low-rate threshold if they are younger than 60;
- an effective way of providing superannuation to a non-working or low-income earning spouse;
- pay for insurance premiums for a non-working or low-income earning spouse;
- provide superannuation benefits earlier by splitting contributions to the older spouse; and
- improve a member's Centrelink position by splitting contributions to the younger spouse.
Claiming a tax Offset
If you're eligible, and you make an after-tax a contribution to your spouse’s super fund, you can claim an 18% tax offset on up to $3,000 through your tax return.
To be eligible for the maximum tax offset, 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 it exceeds $37,000, you’re still eligible for a partial offset. However, once their income* reaches $40,000, you’ll no longer be eligible, but can still make contributions on their behalf.
*including assessable income, reportable fringe benefits and salary sacrifice amounts
To make a Spouse Contribution in the 2019/20 financial year, you must make an after-tax payment to your spouse's legalsuper account and complete and return the Spouse contribution form before 30 June 2020.
Requests to split contributions need to be made by 30 June of the financial year following the year the contributions were made, so you can split some of your 2018/19 super contributions if you lodge a request with your super fund by 30 June 2020.
For detailed information about spouse contribution and splitting, eligibility criteria and how to make contributions.
A spouse contribution is an after-tax (voluntary) contribution made to your spouse’s super account. Spouse contributions build up your super as a couple and can be tax-effective. By making a contribution to your spouse’s super, not only are you helping them – if your partner earns less than $40,000 a year you could be eligible for a tax offset (up to $540). It’s a great way to make sure that one partner’s super doesn’t suffer if they are working reduced hours, on parental leave, or unable to work.
How to make a spouse contribution
Your spouse will need to join legalsuper before they can receive contributions made by you. A completed Spouse Contribution form must be sent to legalsuper with each spouse contribution: Spouse contribution (90.64 KB)
How to claim a tax offset for a spouse contribution
A tax offset of up to $540 may be available for up to $3,000 of superannuation contributions made by a taxpayer on behalf of a non-working or low-income spouse. The spouse contributions offset cannot be claimed for contributions split from your account to your spouse’s account.
The offset can be claimed through the completion of the T3 section of your tax return. For more information, refer to the Australian Taxation Office.
The offset is available to a person where:
- the person has a spouse;
- the person makes after-tax (i.e. not salary sacrifice) contributions on behalf of his/her spouse;
- the contributions are not tax-deductible for the person contributing;
- both the person contributing and the spouse are Australian residents when the contribution is made;
- at the time the contribution is made, the person contributing and the spouse must not have been living separately and apart on a permanent basis; and
- the spouse’s total income (including assessable income, reportable fringe benefits and salary sacrifice amounts) is less than $40,000.
The receiving spouse:
- if under age 65 at the time the contribution is received, is not required to have ever been gainfully employed;
- if aged 65-69 when the contribution is received, must be gainfully employed for at least 40 hours in a period of not more than 30 consecutive days in that financial year;
- cannot be accepted into an account after the receiving spouse turns age 70;
- cannot have exceeded their non-concessional contributions cap;
- cannot have a Total Superannuation Balance of $1.6 million or more;
- must be an Australian resident when the contribution is made for the contributor to be eligible to claim a tax offset.
The spouse of a person includes:
- another person with whom the person is in a relationship that is registered under a state law or territory law; and
- another person who, although not legally married to the person, lives with the person on a genuine domestic basis in a relationship as a couple.
Spouse contributions are currently treated as follows for taxation purposes:
- non-concessional contributions;
- tax-free when withdrawn (but interest on these amounts may be taxed); and
- not subject to 15% contributions tax.
Contribution splitting allows you to split certain concessional (before-tax) contributions with your spouse. You can use this strategy to help balance the amounts of super to keep both partners on track for retirement, and make your savings more tax-effective. Contribution splitting involves transferring concessional contributions (such as employer, salary sacrifice or personal deductible contributions) made in the current and previous financial years to your eligible spouse's super account. This can be particularly beneficial for higher income earners and pre-retirement couples where one spouse's super account balance is expected to exceed $1.6 million. However, it's important to note that contribution splitting does not reduce the amount counted towards your concessional contributions cap.
To split your contributions, complete and return this form to us.
When to apply to split your contributions
You can apply to split your contributions when you are any age, but your spouse must be either:
- less than the preservation age that applies to them
- aged between their preservation age and 65 years, and not retired.
Lodge an application with legalsuper in the financial year:
- immediately after the financial year in which the contributions were made; or
- the contributions were made, only if your entire benefit is being withdrawn before the end of that financial year as a rollover, transfer, lump-sum benefit or combination of these.
For example, if you're applying in the 2019–20 financial year, the super contributions to be split must have been made on or after 1 July 2018.
Your application to split your contributions is invalid if any of the following apply:
- you have already applied in that financial year and legalsuper has received your application;
- the amount of benefits you have applied to split is more than the maximum amount that can be split;
- your spouse is 65 years and over; or
- your spouse has reached their preservation age and is retired.
What contributions can be split
The two main types of contributions that can be split with your spouse are:
- taxed splittable contributions; and
- untaxed splittable employer contributions.
Splittable contributions include:
- employer contributions;
- salary sacrifice contributions;
- personal contributions that you can claim a deduction for;
- contributions made by family and friends (other than those made by your spouse or for a child under 18 years old); and
- allocations from reserves that are assessable, such as allocations that meet an employer's obligation to contribute.
The maximum amount that can be transferred to your spouse each financial year usually depends on the amount and type of contributions made by you or for you in the previous financial year. You must still adhere to the contributions caps.
(If your entire benefit will be rolled over, transferred or withdrawn in that financial year, it can also depend on the contributions made in the current financial year)
What contributions cannot be split
Any contributions that are not taxed splittable contributions or untaxed splittable contributions cannot be split with your spouse.
Types of contributions that can't be split include:
- personal contributions that you can't claim a deduction for;
- contributions you make with a capital gains tax (CGT) cap election for small business;
- contributions you make with a personal injury election;
- contributions made by your spouse to your super;
- contributions made for you if you are under 18 years old (unless made by your employer);
- transfers from foreign funds;
- other allocations from reserves;
- rollover super benefit;
- contributions that have already been split;
- government co-contributions;
- government low income super tax offset contribution;
- First home super saver scheme contributions;
- downsizer contributions;
- temporary resident contributions;
- trustee contributions; and
- a super interest that is subject to a payment split (due to a relationship breakdown).
Watch our webinar on the fundamentals of super contributions
To book an appointment to discuss your super with an experienced Client Service Manager in your region, send an email with your name, state and preferred contact details to firstname.lastname@example.org and we will be in touch.