Super-related tax offsets

Super-related tax offsets

Super-related tax offsets

You may be eligible to claim a tax offset on your super income stream and super contributions you make on behalf of your spouse.

Australian super income stream tax offset

A super income stream is a series of regular payments from your super fund. If you receive income from an Australian super income stream, you may be eligible for a tax offset equal to:

15% of the taxed element
10% of the untaxed element.

The tax offset amount available to you on your taxed element will be shown on your PAYG payment summary – superannuation income stream.

There is a limit on the amount of tax offset you can claim on your untaxed element. This offset is generally limited to $10,625 for the 2021–22 income year ($10,000 for the 2020–21 and earlier income years) and will not be shown on your payment summary.

To work out if you can claim a tax offset on your untaxed element, use the Defined benefit income cap tool.

You can’t claim a tax offset for the taxed element of any super income stream you receive before you reach your preservation age. Except where the super income stream is either a:

disability super benefit
death benefit income stream.

You can’t claim a tax offset for the untaxed element of any super income stream you receive before you turn 60 years old, unless:

the super income stream is a death benefit income stream
the deceased died after they turned 60 years old.

Tax offset for super contributions on behalf of your spouse

You may be able to claim a tax offset if you make an eligible contribution on behalf of your spouse (married or de facto) who is earning a low income or not working. The contribution needs to be made to:

a complying super fund
retirement savings account (RSA).

You can claim a tax offset of up to $540 per year for the income year you are claiming the tax offset if you meet all of the following conditions:

the contributions were made to a super fund that was a complying super fund for the income year in which you made the contribution
both you and your spouse were Australian residents when the contributions were made
the contributions were not deductible by you
when making the contributions you and your spouse were not living separately and apart on a permanent basis.

For income years before 2017–18:

your spouse’s income is less than $13,800, that is the sum of your spouse’s

assessable income
total reportable fringe benefits amounts
total reportable employer super contributions.

For the 2017–18 income year:

your spouse’s income is less than $40,000, that is the sum of your spouse’s

assessable income
total reportable fringe benefits amounts
total reportable employer super contributions.

For the 2017–18 income year and later income years your spouse had neither:

exceeded their non-concessional contributions cap for the relevant year
a total super balance equal to or exceeding the transfer balance cap immediately before the start of the income year in which the contribution was made. The general transfer balance cap for 2021–22 is $1.7 million ($1.6 million for the 2020–21 and earlier income years).

For the 2018–19 income year and later income years:

your spouse’s income is less than $40,000, that is the sum of your spouse’s

assessable income (disregarding your spouse’s FHSS released amount for the income year),
total reportable fringe benefits amounts and
total reportable employer superannuation contributions.

for income years before 2020–21, your spouse was under 70 years old when the contributions were made.
from 1 July 2020 your spouse was under 75 years old when the contributions were made.

You can claim the maximum tax offset of $540 where both of the following apply:

you contribute to the eligible super fund of your spouse, whether married or de facto
your spouse’s income is $37,000 or less.

The tax offset amount reduces when your spouse’s income is greater than $37,000 and completely phases out when your spouse’s income reaches $40,000. The tax offset is calculated as 18% of the lesser of:

$3,000 minus the amount by which your spouse’s income exceeds $37,000
the sum of your spouse contributions in the income year.

The tax offset for eligible spouse contributions can’t be claimed for super contributions that you made to your own fund, then split to your spouse. That is called a rollover or transfer, not a contribution.

Example: eligibility for the tax offset for super contributions on behalf of your spouse

Robert and Judy are spouses. Robert earns $19,000 in 2018–19 and Judy makes a $3,500 contribution to Robert’s super fund.

Robert and Judy meet the eligibility requirements to claim a tax offset. Judy can claim a tax offset in her 2018–19 tax return for the contributions she makes to Robert’s super fund.

The tax offset is calculated as 18% of the lesser of:

$3,000 minus the amount over $37,000 that Robert earned (in this case, nil)
the value of the spouse contributions (in this case, $3,500).

Judy can claim a tax offset of $540, being 18% of $3,000.

End of example

 

Example: eligibility for a part tax offset for super contributions on behalf of your spouse

Carmel and Adam are married and living together. Carmel is 46 years old and her income is $38,000 per year. Carmel has not exceeded her non-concessional contributions cap for the income year, and her total super balance is under $1.6 million.

Adam wishes to make a super contribution of $3,000, on Carmel’s behalf, to her complying super fund.

Before 1 July 2017, Carmel’s income would be too high and therefore Adam would not be eligible for a spouse tax offset for an eligible contribution.

From 1 July 2017, under the new arrangements, Carmel’s income is under the threshold. Adam is eligible for a tax offset. As Carmel earns more than $37,000 per year, Adam will not receive the maximum tax offset of $540. Instead, Adam calculates his entitlement as 18% of the lesser of:

$3,000 reduced by every dollar over $37,000 that Carmel earns
the value of spouse contributions.

Carmel earns $1,000 over the $37,000 income threshold. Adam’s tax offset is $360. This is calculated as 18% of $2,000 ($3,000 reduced by the $1,000 that Carmel earned over the $37,000 income threshold). This amount is less than the value of the spouse contributions ($3,000).

Australian Taxation Office
(ATO)