Spouse tax offset
If you contribute to the super fund of your eligible spouse, you may be entitled to tax compensation. This tax compensation applies to contributions you make on behalf of your non-working or low-income spouse, whether married or factual. The amount of tax compensation will be gradually reduced for income above this amount and will disappear completely when your spouse’s income reaches $ 40,000.
To receive the compensation, the details of the claim must be included in the contributor’s annual tax return, including the amount of the contributions and the amount of the compensation claim.
It must also be ensured that the details of the spouse are fully completed in the tax declaration of the contributor, including the taxable income of the spouse, the total amounts to be reported for secondary wages and the amounts to be reported for employer’s contribution to the employer. These essential details are matched and tuned by the ATO for the aspect of the income adjustment of the offset formula.
Vital information about spouse tax offset
- The spouses contributions are fully exempted tax-free components and as non-concessional (after tax) contributions they fall under the ceiling of the non-concessional contributions of the receiving spouse.
- The non-refundable compensation – this means a reimbursement of unused compensation is not available if the offset value is higher than the tax payable.
- Superannuation Funds are required to separately identify marital contributions and report in the annual member statement.
In 2016–17, you could claim the maximum tax offset of $540 for contributions you make to your spouse’s eligible super fund if, among other things, the sum of your spouse’s assessable income, total reportable fringe benefits, and reportable employer super contributions is $10,800 or less. The tax offset amount gradually reduces income above $10,800 and completely phases out when the income reaches $13,800.
On 1 July 2017, the spouse income threshold increased, meaning more people are eligible to claim the tax offset for the 2017-18 and future financial years. You can claim the maximum tax offset of $540 if you contribute to the eligible super fund of your spouse, whether married or de-facto, and
- your spouse’s income is $37,000 or less.
The tax offset amount will gradually reduce income above this amount and completely phases out when your spouse’s income reaches $40,000.
You will not be entitled to the tax offset when your spouse receiving the contribution:
- exceeds their non-concessional contributions cap for the relevant year, or
- has a total superannuation balance equal to or exceeding the general transfer balance cap ($1.6 million for 2017–18) immediately before the start of the financial year in which the contribution was made.
This change intends to extend the spouse tax offset to assist more couples to support each other in saving for retirement. This will better target super tax concessions to low-income earners and people with interrupted work patterns.