Jason Hurst, technical superannuation adviser for the Knowledge Shop, has said in a recent webinar for Accurium that spouse contributions are non-concessional contributions for the receiving spouse and like any other contribution, still need to consider the caps and the TSB rules for the receiving spouse, not for the contributing spouse.
“The contributing spouse can be of any age, but the receiving spouse has to be young enough to receive that contribution,” Hurst said.
“The offset is basically a spouse contribution offset that can be available to the contributing spouse on amounts up to $3,000 that is provided when the receiving spouse’s adjusted taxable income is below $37,000. If that is the case, then the contributing spouse will get an 18 per cent rebate on up to $3,000, so they’ll get a $540 rebate.”
If the receiving spouse’s income exceeded $37,000, that offset would start to taper down and cut out at $40,000.
“Most commonly, we probably see this where one member of a couple is perhaps a high earner, and the other member might be working part-time or not working and earning under $37,000. It could also apply in cases where perhaps both members of a couple have semi-retired and scaled back their work hours,” Hurst said.
“If both members of a couple were earning around $35,000 each, they could do a $3,000 contribution to each other and then get a $540 offset as well.”
The contributing spouse’s income had no lower or upper limit and it was only the receiving spouse’s income that was assessed for the offset.
Hurst said the government co-contribution to a fund needed to be triggered by an NCC, and there was a potential 50 per cent matching contribution on amounts up to $1,000.
“Even if someone does contribute $360,000 as an NCC, the ATO, behind the scenes, assesses whether they are eligible for a matching contribution and if they are, then they would get that matching contribution on NCCS and up to $1,000.”
“To get the best out of this, the member needs to be earning below $45,400 and if that was the case, they would get a $500 matching contribution on $1,000. The benefit becomes minimal as they get closer to this $60,409 and then after that, there would be no matching contribution.”
Hurst warned that to trigger a co-contribution the member must lodge a tax return, even if their income was below normal requirements to do so.
“To get that co-contribution, they must lodge a tax return, and that tax return must include at least 10 per cent of income coming from employment or carrying on a business,” he said.
“Somebody earning only passive income, even if they’re below that $45,400, won’t be eligible for a co-contribution. They will need at least some of their income, about 10 per cent coming from employment or running business.”
Furthermore, he said the other conditions that must be met to claim a co-contribution are that the member needs to be under 71 years old, not have exceeded their NCC cap and have a total super balance of less than $1.9 million.
“We do get asked this question from time to time about whether someone can make a $3,000 spouse contribution and also get the co-contribution,” he said.
“It’s really tricky to piece these together through legislation, but it seems the ATO position is that the $3,000 spouse contribution won’t contribute to a co-contribution. So, if someone wants to take advantage of both of these things, they need to make at least a $1,000 NCC as a member contribution, and $3,000 as a spouse contribution.”
