Hello Lads, Just wanted to know if 'spouse super contributions' act to reduce ones taxable income for the year. For example Max is married to Tracy. Tracy has taken the last year off work to raise their baby girl, Blythe. Max is on track to earn a before tax income for the 2012/13 year of $47,000. Max chooses to contributes $10,000 after tax dollars for Tracy into the couples SMSF they set up last year. As he has contributed more than 'maximum' $3000 for Tracy the Government has also co-contributed 18% of the first $3000, to a maximum of $540 per year into their SMSF account. But has Max also dastardly reduce his taxable income for the 2012/13 year by $10,000. That is my question... I've been googling hard for some clear cut answers on this one but to no avail, and as can be expected the ATO is about as clear as mud. Any answers would be appreciated. Thanks in advance. Kind Regards, Emanance. http://www.ato.gov.au/super/content.aspx?menuid=0&doc=/content/19144.htm&page=1&H1 http://www.onepath.com.au/public/pdfs/L4503_ES_SpouseContributions.pdf http://www.onepath.com.au/public/pdfs/L4503_ES_SpouseContributions.pdf
I would think he hasn't, because as you state he has done this from his after tax income. If he had arranged for $10,000 of his salary to be transferred to super before he was paid, then yes, he has decreased his taxable income. But (I'm not sure on this) the employer would probably want to treat this the same as their contributions and not issue a receipt/payslip etc in the wifes' name. If you mean by a personal tax deduction of $10,000 after the contribution, as it states on the ATO link you've provided, you can't get the tax offset if you use the deduction method so you'd need to do the maths to work out which is the most beneficial tax option. So in answer to your question I believe (and I'm no expert) you can only use contributions to your own super to lower your taxable income. Otherwise to give to your wifes' account you get a maximum offset of up to $540 if you/she qualifies. Whether a $10,000 deduction is preferable to a $540 offset is up to an individuals' circumstances IMO. Note I'm not writing here as an expert on anything or providing financial advice.
Probably only makes sense to make a personal tax deduction (i.e. after income tax) contribution up to $3,000 as a 'partner contribution' to the wife's account. I.e. 3000 / 100 *18 = 540. The husband is able to claim this rebate/offset in his tax return. The further $7,000 is probably better as a salary sacrifice (i.e. before income tax) contribution, as the husband has an effective tax rate of 30%. By pushing the $7,000 into super this way, it is taxed at 15% on entry (i.e contributes $7,000 - (7000/100*15) = $5,950 into the super. If done post tax, the same $7,000 is first subject to income tax of 30%. Which really means (7000 - (7000/100*30) = $4,900 into super. Does this make any sense? Watch out of the contribution caps of $25,000 for this financial year on salary sacrifice and Super Guarantee contributions, because if you exceed it you pay tax at the highest rate on amounts in excess of the caps. In short, the 'partner contribution' doesn't reduce your taxable income, it provides you with a tax rebate/offset (not sure of the right word to use). Max has in fact, not reduced his taxable income by $10,000 in your example. This is not financial advice, and you should make sure you check out any information you get on the internet!!
