If you are planning on enjoying retirement on your own terms, it can be beneficial to make additional payments into superannuation. According to figures from 2016, the average Australian couple needs at least $59,000 annually to live a comfortable retirement where living expenses and medical costs will be covered. Even with contributions from your employer and voluntary contributions, your total accumulatied savings at retirement age may not be enough.
If you want to boost your super fund while taking advantage of valuable tax benefits, you could make a spouse super contribution.
How it Works
You can make super contributions for your spouse if they are a low income earner (Less than $13,800 including assessable income, total reportable fringe benefits and reportable employer super contributions in the 16-17 financial year) or are unemployed. You may qualify for a tax offset of 18% on contributions up to a maximum value of $3000. The offset will be worth a maximum value of $540.
To be eligible to make payments to your spouse, they will need to be a member of a superannuation fund that is in fully compliant. If your spouse is under the age of 65, then there is no employment requirement. If they’re over 65, they should be a low income earner working on at least a part time basis.
Both of you will need to be Australian residents, and you will need to be living together and not under any kind of separation agreement.
What’s Changing This Year?
From the 1st of July, 2017, the offset will be set at a static rate of 18%. In recent years, the offset would reduce if your spouse’s income was over $37,000 per annum. The latest changes mean that you can contribute to your spouse if they earn $40,000 or less. The new change removes complications from the spouse contribution arrangement, and should make it easier for low income earners or irregular workers to receive contributions from their spouses. A balance cap does still remain in place, so if your spouse has a superannuation balance of $1.6 million or more, then you won’t be eligible for the tax offset.
Keep in mind that a spouse doesn’t have to mean your husband or wife by law. De facto domestic couples and couples in relationships that are registered by territory or state law are considered to be spouses.
Are You Ready for Retirement?
The spouse contribution is just one way that you can start building up your retirement savings with your spouse. Super coverage is essential for ageing couples, and with life expectancies increasing in Australia, your retirement money will need to last you for longer when compared with previous generations.
Ensure that you’re up to speed with all of the latest changes in super by visiting the Australian Tax Office page, and remember that regular and voluntary contributions are the best way to prepare for a more comfortable retirement.
For more information on Spouse contributions, please feel free to contact us to chat further about this.We can be contacted by phone on 03-9596 7733 or via email to firstname.lastname@example.org