Q: My wife works part-time for a 2 days a week. I have been told I can transfer Superannuation contributions that I receive to her. Are there any other tax or Superannuation benefits we may be eligible for by making a contribution to her Superannuation fund?
A: You can generally split up to 85% of the employer contributions you received, or personal deductible superannuation contributions you made, during the previous financial year with your spouse as long as they are eligible.
This is referred to as contributions splitting. Contributions splitting can be of assistance in reducing your total super balance, a figure that is used to determine your eligibility for various superannuation strategies, or it can simply be a means to achieve greater equalisation of retirement savings between you and your spouse.
To be eligible, your spouse must be under age 70, living with you and if over her preservation age, she must not be retired and if over age 65, satisfy the work test of 40 hours in a 30 day period in the tax year (prior to making a contribution). She must also not have a total superannuation balance at 30 June of the previous year greater than $1.6 million.
The payment of the contributions-splitting benefit is paid as a rollover to your spouse. It is not a contribution.
Unless the contributing member is leaving the fund during the same financial year as the concessional contribution is made, a splitting request can only be made for contributions made during the previous financial year.
The amount that can be split this financial year is the lesser of 85% of the concessional contributions made to your account or $25,000 during the 2018-19 financial year. For example if you, as the contributing spouse have received an employer contribution, or you made a personal deductible superannuation contribution, of $25,000, the maximum that could be split would be 85% (or $21,250). If, however, the contributions had been $40,000, which would be considered an excess Concessional contribution, the amount that could be split would be limited to $25,000.
Contributions splitting does not reduce the contributions originally made for the member for contribution caps purposes.
If your wife’s income is less than $37,000, she may be eligible to receive the low income Superannuation tax offset. The offset represents a refund of the 15% Contributions tax payable by her fund on employer contributions, or personal deductible superannuation contributions she has made during the financial year. The maximum refund is $500.
Another opportunity for tax benefits could be to make a Spouse Superannuation contribution. If your wife’s income is less than $40,000, you may be entitled to an income tax offset of 18% of the contribution you make on her behalf up to $540.
To receive this maximum tax offset of $540, you will need to make a spouse superannuation contribution of $3,000 before 30 June and your wife’s income will need to be less than $37,000. To be eligible your wife must also be under age 70.