But you can still help your spouse’s superannuation continue to grow. And you don’t even need to set up new super accounts. There are several ways you can do so, including sharing your super with your spouse, that will help both of you feel financially secure as you start retirement planning.
Recent changes in policies for couples that want to share their super
Some superannuation reforms were introduced on 1 July 2017 and that meant more reasons for you to share or boost your super with your spouse. One major change is the transfer balance cap, which limits how much money can be moved in the super accumulation phase to the retirement phase, where investment returns are not subject to tax. The cap initially started at $1.6 million per person (and is now $1.9 million in FY24) with anything over that remaining in the accumulation phase and subject to investment earnings tax of up to 15%. This means that splitting super between yourselves can help maximise retirement savings.
Another change is that if you both have super balances under $500,000 as at 30 June in the previous financial year, you can carry forward unused concessional contributions (before-tax contributions) for up to five years and make catch-up contributions. This new rule also increases the flexibility of salary sacrifice arrangements.
Benefits of sharing your super with your spouse
If your spouse is earning a low income or taking time off work, they might not be getting much contributed into super. This means that their super can fall behind, and that can affect you both when you retire. Adding to their super could benefit you both financially. The transfer balance cap is a personal cap, both spouses can benefit individually with their own transfer balance cap. e.g. take a couple at retirement where A has $3.2 mil and B has $200k. A can only have a max of $1.9 mil in their retirement phrase pension. It would have been better if A shared more with B.
Tax benefits
Sharing super can help to balance your incomes in retirement, which might lower the total tax you pay as a couple. Also with spouse contributions you might be eligible for a personal tax offset of up to $540 per year if you put $3,000 in after-tax contributions into your spouse’s super account.
Reduced fees and costs
By sharing super and using one of the below methods to effectively reduce your super balance and increase your spouse’s balance, you could be eligible for higher Centrelink Age Pension entitlements, provide access to super sooner, or reduce your balance for transfer balance cap and total super balance purposes.
Improved retirement planning
When you’re doing your retirement planning, sharing your super with your spouse can help you balance your retirement incomes and, in turn, help with your financial stability. Sharing can also offer tax benefits and simplify estate planning. Together, you can achieve your retirement goals and ensure a comfortable future.
Strategies for sharing super
Making contributions to spouse’s account
Like personal contributions, you can always add money to your spouse’s account as an after-tax super contribution. You can’t contribute more than the $110,000 non-concessional contributions cap, per year. It’s also important to note that, once someone’s super balance reaches $1.9 million or above as of 30 June 2023, you can no longer make non-concessional contributions. If your spouse has a low income and meets the eligibility requirements, you may be able to claim a personal tax offset (see heading below).
Contribution splitting
If your fund allows for it, another way to share super is by splitting up to 85% of your concessional contributions with your spouse. Concessional super contributions can include employer and or salary-sacrifice contributions and voluntary contributions you may have claimed a tax deduction on. To split your contributions, you might need to complete the fund’s Contribution splitting form. To be eligible for contributions splitting, the receiving spouse must be under their preservation age, or between their preservation age and 65 (and not retired).
Recontribution strategy
Once you have met a condition of release with unrestricted access, a re-contribution strategy is where you withdraw all or part of your super into your bank account, pay any tax required on the withdrawal, and then re-contribute it back into your spouse’s super account as an after-tax contribution. When you re-contribute the money under this strategy, it will be subject to contribution caps (so make sure you can re-contribute the amount). When you withdraw this money at a later date, you or your beneficiaries won’t have to pay tax on the amount because it forms part of your tax free component.
Spouse contributions and claiming tax offset
If you pay any after-tax contributions to your spouse’s fund, these might be eligible for a tax offset of up to 18% for contributions of up to $3,000 per year (i.e. up to $540 tax offset). You can claim this offset when you do your tax return. You can make higher contributions however, the tax offset is limited to the first $3,000 contributed in the financial year. Learn more about how super contributions are taxed.
Before committing to sharing any of your super with your spouse, be sure to check the eligibility criteria and seek financial advice if you are unsure.
Spouse contribution example
Here is an example of what a spouse’s super contribution can look like.
Michael has a salary of $80,000 per year (before deductions, including tax). He wants to contribute into his spouse, Louise’s, super account and help boost her super balance.
Michael’s starting point
| Gross salary income | $80,000 |
| – Income tax | $16,467 |
| – Medicare levy | $1,600 |
| Disposable income | $61,933 |
Scenario 1 – Michael’s spouse, Louise, doesn't work
Michael contributes $3,000 from his savings into Louise’s super account. He is eligible for the full $540 tax offset.
Here’s what it would look like based on September 2023 tax and Medicare rates:
| Gross salary income | $80,000 |
| – Income tax | $16,467 |
| – Medicare levy | $1,600 |
| + Tax offset | $540 |
| Disposable income | $62,473 |
| – Spouse Contribution | $3,000 |
| Income for 2023/24 | $59,473 |
Scenario 2 – Michael’s spouse, Louise earns $39,000 (total assessable income)
Michael contributes $3,000 from his savings into Louise’s super account. He is eligible for a $180 tax offset because Louise earns more than $37,000 but less than $40,000.
Here’s what it would look like based on September 2023 tax and Medicare rates:
| Gross salary income | $80,000 |
| – Income tax | $16,467 |
| – Medicare levy | $1,600 |
| + Tax offset | $180 |
| Disposable income | $62,113 |
| – Spouse Contribution | $3,000 |
| Income for 2023/24 | $59,113 |
For each of these scenarios, the following assumptions apply:
- the scenarios consider the financial circumstances of Michael and Louise as though it will be their final position as at 30 June 2024
- the applicable tax rates are based on FY24 tax rates
- both Michael and Louise are eligible to make contributions without breaching their contribution caps
- it doesn’t consider any deductions or offsets that either Michael or Louise may be entitled to claim in FY24
Common mistakes to avoid
Overlooking tax implications
It’s important to consider what tax you might have to pay on any of your contributions. Concessional (before-tax) and non-concessional (after-tax) contributions will have different super contributions tax associated with them. Make sure you understand what super contribution you are paying to avoid unexpected tax liabilities and seek financial advice if you need it.
Not updating beneficiary information
Nominating a beneficiary helps your super or pension benefits go to someone important to you, like your spouse or de facto partner. If you don’t add a beneficiary nomination or don’t keep it updated, your remaining balance and relevant insurance benefits will go to whoever your super fund trustee decides, and this might not be your first choice.