Spouse contributions & contribution splitting
Read about the potential tax benefits of making super contributions to your spouse’s super, or splitting certain contributions that have been made to your own account.
Spouse 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 be a legalsuper member before they can receive contributions made by you. You must complete and return the spouse contribution form to legalsuper with each spouse contribution made.
Claiming 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 ATO page.
Eligibility
Not everyone is eligible to make a spouse contribution or to receive the tax offset. To be entitled to the spouse contributions tax offset. The basic criteria are:
- you must make a contribution to your spouse’s super using after-tax dollars, which you haven’t claimed as a tax deduction
- you must be married or in a de facto relationship
- you must both be Australian residents
- your spouse is under age 75;
- the receiving spouse’s income must be $37,000 or less for you to qualify for the full tax offset and less than $40,000 for you to receive a partial tax offset.
Eligibility in detail
The offset is available to a person where:
- the person has a spouse;
- the person makes after-tax (ie. not salary sacrifice) contributions on behalf of their 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 person making the contributions:
- can be any age ;
- cannot be the employer of the receiving spouse ;
- must be an Australian resident to be able to claim a tax offset; and
- must be receiving assessable income (from any source).
The receiving spouse:
- is under age 75; and
- is an Australian resident; and
- has supplied a valid TFN;
The spouse of a person includes:
- another person (of any gender) with whom the person is in a relationship that is registered under state law or territory law; or
- another person (of any gender) who, although not legally married to the person, lives with the person on a genuine domestic basis in a relationship as a couple.
Preservation:
- if the receiving spouse has never been employed, then any benefits arising from spouse contributions are generally preserved until age 65.
- if the receiving spouse has been employed, then any benefits arising from spouse contributions are generally preserved.
Contribution Splitting
Contribution splitting allows you to split certain before-tax (concessional) contributions with your spouse. This strategy can help balance your super accounts to keep on track for retirement and make your savings more tax-effective.
Contribution splitting involves transferring before-tax contributions (such as employer Super Guarantee payments, salary sacrifice or personal deductible contributions) to your 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 $1.9 million (in 2023/24).
Contribution splitting does not reduce the amount counted towards your concessional contributions cap.
How to split your contributions with your spouse
Review your splittable contributions and read the below information before applying to split your contributions, then complete and return the Contribution Splitting Application form to legalsuper.
Benefits of contribution splitting
Some of the benefits of splitting contributions with your spouse include:
- Earlier access to tax-free super benefits
Splitting contributions could allow super money to be accessed tax-free and earlier than what might otherwise be possible if they remained in the contributing spouse’s fund. For example, a member aged 54 might split contributions with their spouse aged 60. If the 60-year-old spouse has retired, they are eligible to withdraw their super as a tax-free lump sum, unlike the younger spouse. - Improve Centrelink/Age Pension position
Splitting contributions may increase pension entitlements, as super assets of a younger spouse may not be assessed when in accumulation phase while they are under Age/Service Pension age. - Total Super Balance (TSB) limits
Your TSB is the total amount an individual has in superannuation and super-related assets. If your TSB was $1.9 million (in 2023/24) or more on 30 June of the preceding financial year, you can't make after-tax contributions to your super. Contribution splitting can help even out two accounts, so both partners can take advantage of opportunities to contribute to super. - Pension transfer balance (TBC) cap
The TBC limits how much you can transfer to a retirement/pension account. $1.9 million (in 2023/24) million the total amount of super that an individual can transfer into tax-free retirement phase. By using contribution splitting, superannuation balances can proactively be evened up between members of a couple, meaning that a greater percentage of wealth in retirement can be held in the tax-free pension environment. - Estate planning
It may bring you peace of mind to know that your spouse has funds prepared for retirement if you were to pass away unexpectedly. - Insurance payments
Contribution splitting can help cover the cost of insurances.
When to split your contributions
You can apply to split your contributions when you're any age, however, your spouse must be either:
- less than their preservation age; or
- aged between their preservation age and 65 years, and not retired.
You must lodge an application with legalsuper:
- in the financial year immediately after the financial year in which the contributions were made; or
- in the financial year the contributions were made, only if your entire benefit is being withdrawn before the end of that financial year (as a rollover, transfer to an income stream, lump-sum benefit or any combination of these.)
For example, if you are applying in the 2023/24 financial year, the super contributions to be split must have been made on or after 1 July 2022.
Eligibility in detail
Invalid applications
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).
