• Change to tax offset for spouse contributions

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    This information is for people who:

    • make contributions to their spouse’s super accounts, and
    • want to claim a tax offset for these contributions.

    How has the spouse tax offset eligibility changed?

    In 2016–17, you can 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 for income above $10,800 and completely phases out when the income reaches $13,800.

    From 1 July 2017, the spouse income threshold will increase, meaning more people will be eligible to claim the tax offset. You will be able to 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 for 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.

    The intent of this change is 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.

    Eligibility rules

    The following eligibility requirements remain in place before and after 1 July 2017:

    • both you and your spouse must be Australian residents when the contributions are made
    • the contributions must not be made to satisfy a family law obligation to split contributions with your spouse
    • the contributions must be made to a complying superannuation fund or a retirement savings account on behalf of your spouse
    • you and your spouse must not be living separately or apart on a permanent basis when the contributions are made
    • the contributions must not be deductible to you.

    You can claim the tax offset for more than one spouse during a financial year if you satisfy the eligibility rules for each spouse. The tax offset is the lesser of the sum of the offset entitlement for each spouse, or $540.

    To claim the tax offset, you need to complete the Superannuation contributions on behalf of your spouse question in the supplementary section of your tax return. You also need to complete Spouse details – married or de facto in your tax return.

    What you can do

    What you can do before 1 July 2017

    Situation

    Action

    If you want to claim a spouse tax offset in your 2016–17 tax return

    You must ensure that:

    • the sum of your spouse's assessable income, total reportable fringe benefits and reportable employer super contributions is less than $13,800
    • the contributions were made to a complying super fund or a retirement savings account on behalf of your spouse
    • you and your spouse were Australian residents when the contributions were made
    • you did not make the contributions to satisfy a family law obligation
    • you did not live separately or apart from your spouse when the contributions were made
    • you do not claim a deduction for the contributions.
     
    What you can do after 1 July 2017

    Situation

    Action

    If you want to claim a spouse tax offset in your 2017–18 or future year tax returns

    You must ensure that:

    • the sum of your spouse's assessable income, total reportable fringe benefits and reportable employer super contributions is less than $40,000
    • your spouse has not exceeded their non-concessional contributions cap for the financial year
    • your spouse’s total superannuation balance on 30 June of the previous financial year is below the general transfer balance cap ($1.6 million in 2017–18)
    • the contributions are made to a complying super fund or a retirement savings account on behalf of your spouse
    • you and your spouse are Australian residents when the contributions were made
    • you did not make the contributions to satisfy a family law obligation
    • you are not living separately or apart from your spouse when the contributions were made
    • you do not claim a deduction for the contributions.

     

    Examples

    Main points

    Example

    • Shannon earns $17,000 in 2016–17
    • Ken makes a contribution to Shannon’s super fund
     

    Ken is not eligible for the spouse tax offset in 2016–17 because Shannon's income is too high. Therefore, he cannot claim a tax offset for the contribution he makes to Shannon's fund.

    • Robert earns $19,000 in 2017–18
    • Judy makes a $3,500 contribution to Robert’s fund
    • The couple meet the eligibility requirements
     

    Robert and Judy meet the eligibility requirements, so Judy can claim a tax offset in her 2017–18 tax return for the contributions she paid into Robert's fund.

    The tax offset is calculated as 18% of the lesser of:

    • $3,000 minus the amount over $37,000 that Robert earned (in this case, nil)
    • the value of the spouse contributions (in this case, $3,500).

    Judy is entitled to a tax offset of $540, being 18% of $3,000.

    • Carmel and Adam are married and living together
    • Carmel’s income is $38,000
    • They are both Australian residents
    • Carmel is 46 years old
    • Carmel has not exceeded her non-concessional contributions cap, and her total superannuation balance is under $1.6 million
     

    Adam wishes to make a super contribution of $3,000, on Carmel’s behalf, to her complying super fund.

    Before 1 July 2017, Carmel’s income would be too high and therefore Adam would not be eligible for a spouse tax offset for an eligible contribution.

    From 1 July 2017, under the new arrangements, Carmel’s income is under the threshold. Adam is eligible for a tax offset. As Carmel earns more than $37,000 per year, Adam will not receive the maximum tax offset of $540. Instead, Adam calculates his entitlement as 18% of the lesser of:

    • $3,000 reduced by every dollar over $37,000 that Carmel earns
    • the value of spouse contributions.

    Carmel earns $1,000 over the $37,000 income threshold. Adam’s tax offset is $360. This is calculated as 18% of $2,000 ($3,000 reduced by the $1,000 that Carmel earned over the $37,000 income threshold). This amount is less than the value of the spouse contributions ($3,000).

    See also:

    Last modified: 24 May 2017QC 51327