You plan for retirement together, so why not save for it together? Spouse contribution splitting lets you look out for your significant other.
There are multiple benefits in sharing your super with your partner.
Time off from paid work directly equates to lost super, so if your spouse goes on leave to raise a family or look after a dependent, their super stops in its tracks.
By contributing to your partner’s super, you put them in better stead and access a range of incentives.
Even if you both work full-time, there are many valid reasons to investigate spouse contribution splitting.
What is spouse contribution splitting?
Contribution splitting allows you to share your concessional contributions with your spouse.
Contributions are considered concessional if they are tax deductible, which may include employer, salary sacrifice and personal contributions.
The definition of ‘spouse’ includes same sex, opposite sex, married and de facto couples.
How does contribution splitting work?
You can share up to 85% of your pre-tax super contributions with your spouse in one financial year. The partner receiving the contributions must be under 55, or between 55 and 65 and not yet retired.
Why should I split my contribution?
There are many benefits in contribution splitting for both you and your spouse.
At the very least, sharing your super means that you are both on the same footing, even if one of you has taken time off to raise a family or pursue new business ventures.
Contribution splitting does not just benefit the partner receiving the additional super. Beyond that, it comes with a host of other incentives.
For example, it is a smart tax move for the person doing the contributing.
If the primary earner voluntarily contributes up to $3,000 to their partner’s super, they themselves are eligible for a tax offset up to $540.
Furthermore, if you and your partner both plan to retire before you turn 60, splitting your super will make you both better off in the short-term.
Anyone who retires before 60 can withdraw a lump sum up to $195,000 from their super tax-free.
If you and your spouse balance out your super, you can both withdraw this maximum benefit before you start paying tax.
Sharing super also lets you and your partner take advantage of any age gap. If your partner is older than you, they will be able to access the tax-free benefit sooner.
With your added super, when they turn 60 there will be more money waiting for withdrawal.
Alternatively, older spouses can take advantage of higher age pensions if they transfer some of their super away to a younger spouse.
This effectively legally exempts money from an asset test.
For all these reasons, you can see why spouse contribution splitting can provide a more stable future and help to build a better nest egg for your family.
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