Smart Super Strategies: Spouse contributions
Split super with your spouse
If you have a spouse, you are permitted to transfer certain super contributions from the previous financial year over to the super account of your partner. If the receiving spouse is over preservation age at the time of the split request, he or she must declare that they are not retired. Splits cannot be done once the receiving spouse turns 65. You can do this every year, once the financial year has ended. Up to 85% of taxable (concessional) contributions such as SG, salary sacrifice and personal deductible contributions made to super can be transferred.
There are several reasons for considering splitting super with your spouse:
- There may be potential tax advantages to withdrawing the money from two super accounts rather than one (between preservation age and age 59).
- Transferring contributions from the younger spouse to the older spouse could enable you to access more retirement money earlier.
- Transferring money from the older spouse to the younger spouse could enable the older spouse to receive more Age Pension by delaying the date at which their super becomes an assessable asset.
- Splitting superannuation monies does not count towards the receiving spouse’s contributions cap.
- Super splitting is not offered by all funds, so you will need to check whether your fund offers this feature.
The benefits of spouse tax offsets
Another potential tax concession is a spouse tax offset. This strategy may be available if you are a taxpayer and a member of a couple that makes after tax contributions to your spouse’s super. To take advantage of this strategy, your spouse will need to be under age 65 or aged 65 to 69 and have satisfied a work test during the financial year. You can open a super account in your spouse’s name and make contributions to that account from your after-tax pay. You can also make these contributions to your spouse’s existing super account.
If your spouse’s assessable income, reportable employer super contributions and reportable fringe benefits are under $10,800 pa, you will receive an 18% tax offset on the first $3,000 you contribute on their behalf, up to $540 pa. The offset operates on a sliding scale and phases out to zero once their income exceeds $13,800 pa.
A word on contributions caps
When considering any super strategy, it’s important to assess how much you are contributing to super in any one financial year. The government has set annual limits – known as contributions caps.
The annual contributions caps as of 1 July 2015 are:
- $30,000 per financial year (indexed) for pre-tax (concessional) contributions if aged under 49 at30 June 2015, or $35,000 (non-indexed) if aged 49 or over at 30 June 2015
- $180,000 per financial year for after-tax (non-concessional) contributions or $540,000 over a three-year period if you are under 65 any time during the financial year you make the contribution.
If you would like to know about strategies to maximise your super, talk to a Roberts & Morrow Financial Services Adviser. They can tailor an appropriate strategy to suit your individual circumstances.
General Advice Warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.