Q. My wife and I are both 65 years old. Can I gift my $90,000 Super to her?
A. As you are age 65, you satisfy a condition of release so you are able to withdraw your Superannuation without restrictions. Funds withdrawn will be tax-free as you are over age 60.
If you wish to put the money back into Superannuation in your wife’s name, your ability to do so will depend upon her satisfying the work test.
In order to be eligible to make a contribution to Superannuation, when the Super fund member who is receiving the contribution is age 65 or older, they are obliged to have worked for 40 hours in a 30 day period in the Financial year prior to the contribution being made.
This test does not apply if the Superannuation fund member is under age 65. So, therefore your wife would need to satisfy a work test to have the contribution accepted.
Presuming that she satisfies the work test, any contribution you make to your wife’s Superannuation will count against the Non-concessional contribution cap of $180,000 in the financial year. This cap includes all Non-Concessional contributions made by you or your wife to her fund in the financial year. Your wife will be ineligible for the 3-year bring forward of contributions as she is over age 65.
Note also that the limit will reduce from $180,000 to $100,000 from 1 July 2017.
You will be ineligible to make use of Spouse Superannuation contribution splitting. Spouse contribution splitting allows the Superannuation fund member to transfer 85% of the Concessional contributions received to a fund in a financial year to their Spouse account provided the spouse is under 65 and not retired.
I am wondering why you would want to remove the funds from your Superannuation?
If you are ineligible to move the money into your wife’s Superannuation fund and you take the money out of the Superannuation system, you may be transitioning the money from a tax-free environment to a potentially taxed environment. To be better off outside the Superannuation system, you would have to have
To be better off outside the Superannuation system, you would have to have a personal taxable income of less than $28,970 each to pay less tax than you would on the earning within your Superannuation fund. Whilst the Personal Income Tax-free threshold is only $18,200, as you are over age 65, you receive the Senior Age Pension Tax Offset (SAPTO) which bolsters your effective tax-free income amount to $28,970.
Whilst your Superannuation is taxed on earnings within the fund at 15% in accumulation mode, your Superannuation benefits are tax exempt to you if they are in an Account based Pension. Perhaps this is a strategy you could consider if you are considering this move to reduce tax.
If your wife is the beneficiary of your Superannuation on your death, the proceeds are tax-free to her.
I see little value in moving money into your wife’s Superannuation as you are both over 65 and entitled to the same Superannuation treatment and benefits.