How Spouse Contributions Can Help You Build Wealth as a Couple

When it comes to building long-term financial security as a couple, many focus on saving, budgeting, or investing. While these are important, one strategy that often goes unnoticed is spouse contributions within the superannuation system. For households where one partner earns less or has taken time out of the workforce, spouse contributions may help build a more balanced retirement outcome and provide tax-related benefits.

This blog post explores spouse contributions, how they work, who is eligible, and why they may be worth considering as part of a couple’s overall wealth creation plan.

Spouse contributions allow one partner to contribute to their spouse's superannuation account. This can be valuable in circumstances where one partner has a lower income or interrupted work patterns, leading to a smaller super balance.

Key points about spouse contributions:

• They are made by one partner into the super fund of their spouse.
• They are voluntary and come from after-tax income.
• Depending on eligibility, they may allow the contributing spouse to claim a tax offset.

By building up both partners’ super balances, couples can approach retirement planning more evenly, particularly when income levels differ significantly.

Not all couples will meet the conditions for spouse contributions. The rules are designed to ensure contributions are made in line with superannuation laws and contribution caps.

Some of the main eligibility criteria include:

• The receiving spouse must be under 75 years old.
• If the receiving spouse is aged 67 to 74, they must meet the work test or be eligible for the work test exemption.
• Contributions must come from after-tax income and count towards the receiving spouse’s non-concessional contributions cap.
• The contributing spouse may claim a tax offset if the receiving spouse’s income falls below certain thresholds.

These requirements highlight the need for couples to review their specific circumstances before deciding whether this strategy is suitable.

The spouse contribution tax offset provides a potential incentive for one partner to contribute to their spouse’s super fund. This offset is available when the receiving spouse has a low income.

The offset operates on a sliding scale depending on the receiving spouse’s annual income:

• Up to $37,000 income: The contributing spouse may be eligible for the maximum offset.
• Between $37,001 and $40,000 income: The offset reduces gradually.
• Above $40,000 income: No offset is available, though contributions can still be made.

This offset reduces the tax payable by the contributing spouse while also supporting the super balance of their partner.

Households in Dubbo and Orange often have circumstances where one partner earns less than the other due to part-time work, childcare responsibilities, or career changes. Addressing this imbalance through spouse contributions can support long-term retirement outcomes.

Some reasons couples might look at this option include:

• Building up super for the partner with a lower balance.
• Making use of potential tax offsets available under the system.
• Retirement planning should be treated as a joint financial responsibility rather than two separate accounts.

Couples in regional areas can strengthen their household approach to wealth creation and retirement planning by taking these steps.

Spouse contributions are just one part of a bigger picture. Couples often combine wealth creation opportunities with other financial planning strategies to maximise them.

Ways spouse contributions may fit into a broader approach:

• Salary sacrifice into superannuation for the higher-earning partner.
• Reviewing household budgeting to allocate funds towards long-term savings.
• Using investment options inside super funds to grow balances over time.
• Considering insurance and estate planning alongside retirement savings strategies.

Couples can create a balanced plan that considers immediate needs and future goals by combining these approaches.

There are many practical scenarios where spouse contributions may help couples.

Examples include:

• One partner takes a career break to care for children, resulting in reduced super contributions.
• A part-time worker with limited income struggles to build superannuation while the other partner works full-time.
• A partner studying or retraining while relying on lower earnings, leaving little room for super contributions.
• Couples where one partner earns just below the tax offset income threshold, making contributions more attractive.

In these situations, spouse contributions can help reduce the long-term gap between super balances and provide a more equal retirement outlook.

Like any financial strategy, spouse contributions come with considerations that couples must consider carefully.

Things to consider:

• Contributions are counted towards the receiving spouse’s non-concessional contributions cap.
• Over-contributing can lead to additional tax liabilities.
• Superannuation contributions are preserved until retirement age, meaning the funds are inaccessible.
• The tax offset is only available if the receiving spouse’s income is below the specified threshold.

These factors highlight the importance of understanding contribution caps and eligibility requirements before deciding.

Navigating superannuation and contribution strategies can be complex. Couples often seek guidance from a financial advisor or financial planner to help them decide whether spouse contributions are appropriate for their circumstances.

Ways an advisor may support couples:

• Reviewing household income and super balances to assess eligibility.
• Structuring contributions in line with contribution caps.
• Exploring other wealth creation strategies that complement spouse contributions.
• Providing tailored advice based on retirement goals and financial planning needs.

Couples can consult a financial advisor in Dubbo or Orange to learn how this strategy fits into their overall wealth creation plan.

Spouse contributions are a little-known but valuable option for couples wanting to build long-term wealth together. By contributing to a partner’s superannuation fund, couples may boost their combined retirement savings and access potential tax offsets.

At Ironbark Wealth Advisors, we focus on helping couples in Dubbo and Orange explore strategies like spouse contributions as part of their household financial planning. If you want to learn more about how spouse contributions could support your wealth creation journey, we invite you to visit us. Get in touch through our contact page or give us a call to arrange a consultation.