Do you have a relatively good level of superannuation? Has your spouse been out of the workforce, looking after kids or running a business without contributing to super?
Heard all the ‘hype’ about Self Managed Super Funds and want to see how you can boost your super accounts to make it work?
It’s not uncommon to see a large difference in the value of superannuation held by two members of a couple.
There are a many different ways that you and your spouse can boost their superannuation balance. The four most common methods are via:
- Spouse Contributions
A spouse contribution can be made to a super fund by an individual on behalf of their spouse.
If your spouse’s total income (adjusted taxable income) is less than $13,800 a tax offset of 18% is available to you for contributions up to $3,000 that you make to your spouse’s superannuation fund.
The offset can be used to reduce the tax payable on your taxable income. You can contribute more than $3,000 to their super fund (within contribution limits) but you won’t receive the spouse contribution tax offset on anything above $3,000.
- Individual Contributions
If you have surplus income or cash funds in your personal or joint names, you may wish to consider using this money for you or your spouse to make after tax (aka: non-concessional) contributions to their super account.
The type and amount of contributions that can be made will depend on factors such as age and employment status.
- Splitting Contributions
In addition to contributing to your spouse’s super, you can also choose to have some of your own super contributions put into their super account (if they are under 65 and not retired).
Super contributions can only be split after the end of a financial year, and some super funds may charge a fee to do this. Two types of contributions can be split: employer and non-concessional contribution.
- Government Co-Contribution
If your spouse is under age 71, has at least 10% of their total income coming from employment or running a business and earning less than $49,488 (2014/15), they may be eligible to receive a Government Co-Contribution if they make personal non-deductible or after-tax contributions to their super account.
The co-contribution is paid at a rate of 50% of the eligible contributions with a maximum co-contribution of $500. The Government’s Co-Contribution is a great way to boost super savings. Use the government’s calculator to find out what you can receive back.
While these four strategies are all effective ways to boost superannuation which ones are right for your situation will depend on you and your spouse’s personal and financial situation. We recommend you speak to us and our aligned financial planners who will be able to guide you through the process and work out the best way for you to build your spouse’s super balance.