38 – Super tax offsets and co-contributions

Superannuation spouse contribution tax offset

Gender inequality in financial planning matters is a serious problem. You can read an article written by Terry McMaster dealing with this issue published in Professional Planner on 17 December 2015 here: Suffragettes need superannuation – and financial planners.

The spouse contributions tax offset rules are part of the Government’s attempts to help redress this gender inequality and increase average female super account balances.

The super spouse contribution tax offset rules create a tax rebate of up to $540 for contributions paid to a low income spouse’s super fund. The rebate applies where the spouse’s assessable income and reportable fringe benefits are less than $13,800. The amount of the rebate is 18% of the lower of:

  1. the total of the amount contributed or
  2. $3,000 less one dollar for every dollar that the spouse’ s assessable income and reportable fringe benefits exceed $10,800.

A rebate of $540 reduces your tax payable by $540 irrespective of your marginal or average tax rate. This means everyone gets the same amount of benefit.

You can read the AMP fact sheet on the Super Spouse Contribution Tax Offset here: AMP spouse superannuation contribution tax offset fact sheet.

The superannuation co-contribution rules

George is sixty and enjoys helping his children get ahead in life.

He encouraged his daughter to resume her education, and is helping out with free room and board and a bit of cash here and there. His daughter works part time as a maths teacher at a Catholic girls college and earns $25,000 a year while she completes a masters degree in science.

George looked at the super co-contribution rules and realised if he paid $1,000 to Catholic Super as a non-concessional contribution the government would tip in an extra $500. That’s a great after tax first year return on her investment and a practical example of what we call inter-generational financial planning.

Inter-generational financial planning focuses on the family as the client, and looks at each family member’s tax, superannuation and Centrelink profile to get the best possible results for the family group.

You can read the AMP fact sheet on the super co-contribution rules here: AMP Super co-contribution fact sheet.

The Dover Group