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Tax benefits for voluntary super contributions made on behalf of spouse

The superannuation system is one of the most tax-effective ways to save money for retirement, however, smaller contributions due to lower income can affect the growth of a person’s nest egg.

Fortunately, the Australian Taxation Office (ATO) allows couples to split their contributions and voluntarily contribute a portion to their spouse’s fund. In return, the contributing spouse can enjoy a spouse tax offset that lowers their tax payable for the financial year.

Here’s a quick guide on the tax benefits of contribution splitting.

What is contribution splitting?

Contribution splitting is a legal strategy that couples can employ to even out superannuation balances. This strategy allows one spouse to divide their own super contributions and transfer a portion to their spouse’s fund as long as they are within the age limit for super contributions.


However, there are two important rules to remember with regard to contribution splitting. These are:

  • The couple, opposite or same-sex, must meet the definition of married or de facto spouses according to the Australian family law; and,
  • This strategy may only be used for concessional or pre-tax contributions—the contributing spouse’s non-concessional contributions and super balance must be left untouched.

Spouses who wish to use this strategy would need to send in an application to the contributing spouse’s fund manager.

How the spouse tax offset works

The spouse tax offset allows the contributing spouse to offset up to $540 from their tax return when they make voluntary contributions from their account to their lower income spouse’s super.

The applicable tax offset is whichever is lesser between:

  • 18 per cent of $3,000, which is equal to $540. This must be reduced by $1 for every $1 in excess of the $37,000 income threshold; and,
  • 18 per cent of the contributing spouse’s contribution.

Beginning July 1, 2018, the income threshold for the receiving spouse increased to $37,000. This amount refers to the combined income from their salary, employer guarantee and fringe benefits.

The contribution limits depend on the type of super fund the contributing spouse has or the type of contributions made in the current financial year.

For accumulation funds, only concessional contributions, such as salary guarantee (SG) and pre-tax salary sacrifice contributions, may be used. There’s also a contribution limit of up to 85 per cent of whichever between the two amounts below is lower:

Any concessional contributions made by and through the contributing spouse’s employer or, for self-employed individuals, any personal contributions that the member will claim a tax deduction for; and the concessional contributions cap for the corresponding financial year.

For public-sector super schemes, members may transfer 100 per cent of their contributions if:

  • It falls under untaxed splittable employer contributions; and,
  • The amount falls below the concessional contributions cap.

Beginning July 1, 2018, the concessional contributions cap for all ages is $25,000.

Spouse contribution eligibility

Since there are two parties involved in this strategy, both spouses must be eligible to give or receive contributions.

To access the benefits of contribution splitting, both spouses should be Australian residents and meet the following eligibility criteria:

Contributing spouse

The contributing spouse may apply for the split at any age as long as the contributions were not deductible to them and the splitting wasn’t due to a family law obligation.

Receiving spouse

The receiving spouse is only eligible if they are below their preservation age or between their preservation age and 65 years old. They must not be retired.

The following also apply:

  • Their total assessable income, including total employer contributions and fringe benefits, is less than $40,000;
  • Their retirement savings is in a complying super fund;
  • They have not exceeded their concessional contributions cap; and,
  • Their super balance for the previous financial year is below the transfer balance cap of $1.6 million (as of July 2018).

If in doubt, it’s best to seek advice from the contributing spouse’s super fund manager.

This information has been sourced from the Australian Taxation Office and Nest Egg.

Tax benefits for voluntary super contributions made on behalf of spouse
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