Spouse Contribution Tax Offset 2018/19

If your spouse’s income is less than $40,000 for the 2018/19 financial year, you could receive a tax offset on your personal income tax return of up to $540 by contributing to their superannuation fund.

Depending on your own levels of income and superannuation contributions, the Spouse Contribution Tax Offset could provide you with the ability to receive further tax savings when saving for retirement, even if you have taken full advantage of the Superannuation Opportunity available since the start of the current financial year.

You and your spouse must meet the following criteria to be eligible to receive a Spouse Contribution Tax Offset for the 2018/19 financial year:

• You must have made a spouse contribution to your spouse’s complying superannuation fund in the current financial year (this contribution cannot be one which is made to satisfy a family law obligation to split contributions with your spouse);
• You and your spouse must be Australian residents when the contribution is made;
• You and your spouse must not be living separately or apart on a permanent basis when the contributions are made;
• Your spouse must not have exceeded their non-concessional contribution cap for the current financial year; and
• Your spouse’s Total Superannuation Balance must have been less than the Transfer Balance Cap on 30 June 2018.

The full Spouse Contribution Tax Offset of $540 is only available where your spouse’s income is $37,000 or less for the current financial year.  If your spouse’s income is between $37,000 and $40,000 for the 2018/19, the tax offset you receive will be scaled down by $0.18 per $1 over $37,000.

Case Study

Erin is 45 years of age and is employed full-time as an accountant receiving an annual salary package of $80,000 plus employer superannuation guarantee contributions.  Her spouse is employed part time, and receives annual employment income of $35,000 plus employer superannuation guarantee contributions.  They have no other sources of income, and satisfy the eligibility criteria outlined above.

Erin makes a contribution of $3,000 to her spouse’s superannuation fund prior to 30 June 2019 and as a result, reduces her tax payable by $540 when her personal income tax return is prepared for the 2018/19 financial year.

Had Erin decided to only make a contribution of $1,000 to her spouse’s superannuation fund prior to 30 June 2019, she would have reduced her tax payable by $180 when her personal income tax return was prepared for the 2018/19 financial year (18% of $1,000).

Depending on your circumstances, you could potentially benefit from financial year end superannuation contributions (have you read our other articles about Tax Deductible Contributions and the Government Co-Contribution?). 

If you would like to arrange a meeting to discuss your circumstances, and how you could benefit from financial year end planning, we encourage you to touch base with us.

The above information represents general advice only and has been prepared without taking into account your personal objectives, financial situation or needs.  Before acting on any general advice you should consider whether or not it is appropriate in regard to your personal objectives, financial situation and needs.