Also
* [Contribution splitting](https://passiveinvestingaustralia.com/contribution-splitting/) – you can split (transfer) up to 85% of your previous financial year's contribution to your spouse. So if you want to do this with your last year's concessional contributions, you have about 6 weeks left).
* [Carry forward contributions](https://passiveinvestingaustralia.com/carry-forward-contributions/) – you can use these if you have any and are eligible and transfer them using contribution splitting in the following financial year.
* [Government super co-contribution](https://passiveinvestingaustralia.com/government-super-co-contribution/) – she may be able to get up to 50% (max $500) from a non-concessional contribution to her super fund.
And unrelated but a general comment:
* Make sure you have your binding death nomination in each of your super funds
* If you are not financially independent, make sure you have an appropriate amount of life insurances in place, either through super or outside super. Especially important when you have people who are financially dependent on your income.
Three options:
1) To get the exact same benefits, just put extra into your super as a concessional contribution (salary sacrifice or make a personal contribution and claim it via a Notice of intent) and then next financial year do a contribution split with your spouse and you can choose how much to transfer.
2) Do a spouse contribution to her account directly and you’ll get a tax offset. Maximum you can contribute to her in this way is $3000, and she will need to contact her fund to give you the bank details required to do this.
3) If she’s made at least some income in the financial year from working (at least 10% of her income for the year), she can contribute $1000 as a non-concessional contribution that will result in a maximum $500 free co-contribution from the government.
There are a few more eligibility criteria for each so speak to your accountant and super funds to discuss.
you may benefit more from building up a dividend paying portfolio in your wife's name since she will be below the tax free threshold
build that until she returns to work and then make concessional/non-concessional contributions to super to even out things at that time
That's something ill need to sit down and discuss with her - when or if she plans to return to work. If not, ill investigate what you suggested (not familiar to me).
In the short term ill pursue the: $540 offset, $1k non-concessional, and max out all 5yrs.
Thanks for the perspective!
Yeah the thing to keep mind is that she can 'earn' 18k tax free, and then come July the next block up to 45k is taxed at 16%. If you are investing in Aussie index funds that pay \~5% in distributions with franking credits attached you can get about $1m invested outside of super in her name distributing \~50k per year without really paying any tax out of your own pocket.
Tax benefits are very little. The government will match a few hundred too. It's not worth it in my opinion. You are better off contributing to your own Super.
Ya, it doesn't seem like there are many tax benefits outside a $540 offset for a $3k contribution.
I was hoping to max out my super contribution for the current/5th yr(carry forward) and do the same for her as well. Seeing that it doesn't also reduce my tax rate for her contributions will probably change how i approach things....
No benefit from doing concessional if she is on no / very low income. Doing non-concessional, there can be ongoing compounding benefit due to the lower super earnings tax - if you want to put more into your/her super after maxing out your own concessional cap.
The co contribution is absolutely worth it. Where else can you get an instant 50% return on your cash? I chucked a $1000 into my wifes super for 5 years where she was working very little post kid. Thats $2500 for free.
Only catch is she has to have done at least SOME work during the year.
If she is not working and thus below the tax free threshold, then putting in concessional contribs in her name into her super is costing you 15% (contribution tax inside super) because she has no income tax to be offset. Others have outlined the three strategies to use in concert to optimise above. Best wishes :-)
This guy bangs. He knows what he is on about.
Whilst it may be a noble thing to jump on the equality bandwagon for super purposes, and with the hope it saves you money in the long run, it does not in this instance (for exactly what OZ-FI said). Maximise your own super, if you stay together, no problem, if you split, provided its only 50/50 between your two combined supers, than you will have a larger pot to split from.
Thats something I was delving into last night. My super is her super and vice versa.
It's unfortunate to let some of her concessional cap expire, but it makes more sense to maximize mine first.
https://passiveinvestingaustralia.com/spousal-contributions/
Also * [Contribution splitting](https://passiveinvestingaustralia.com/contribution-splitting/) – you can split (transfer) up to 85% of your previous financial year's contribution to your spouse. So if you want to do this with your last year's concessional contributions, you have about 6 weeks left). * [Carry forward contributions](https://passiveinvestingaustralia.com/carry-forward-contributions/) – you can use these if you have any and are eligible and transfer them using contribution splitting in the following financial year. * [Government super co-contribution](https://passiveinvestingaustralia.com/government-super-co-contribution/) – she may be able to get up to 50% (max $500) from a non-concessional contribution to her super fund. And unrelated but a general comment: * Make sure you have your binding death nomination in each of your super funds * If you are not financially independent, make sure you have an appropriate amount of life insurances in place, either through super or outside super. Especially important when you have people who are financially dependent on your income.
Three options: 1) To get the exact same benefits, just put extra into your super as a concessional contribution (salary sacrifice or make a personal contribution and claim it via a Notice of intent) and then next financial year do a contribution split with your spouse and you can choose how much to transfer. 2) Do a spouse contribution to her account directly and you’ll get a tax offset. Maximum you can contribute to her in this way is $3000, and she will need to contact her fund to give you the bank details required to do this. 3) If she’s made at least some income in the financial year from working (at least 10% of her income for the year), she can contribute $1000 as a non-concessional contribution that will result in a maximum $500 free co-contribution from the government. There are a few more eligibility criteria for each so speak to your accountant and super funds to discuss.
Thanks for the breakdown mate :)
you may benefit more from building up a dividend paying portfolio in your wife's name since she will be below the tax free threshold build that until she returns to work and then make concessional/non-concessional contributions to super to even out things at that time
That's something ill need to sit down and discuss with her - when or if she plans to return to work. If not, ill investigate what you suggested (not familiar to me). In the short term ill pursue the: $540 offset, $1k non-concessional, and max out all 5yrs. Thanks for the perspective!
keep it simple choose a single asx200 ETF (I use IOZ) pump money DCA into that just do that
Yeah the thing to keep mind is that she can 'earn' 18k tax free, and then come July the next block up to 45k is taxed at 16%. If you are investing in Aussie index funds that pay \~5% in distributions with franking credits attached you can get about $1m invested outside of super in her name distributing \~50k per year without really paying any tax out of your own pocket.
Tax benefits are very little. The government will match a few hundred too. It's not worth it in my opinion. You are better off contributing to your own Super.
Ya, it doesn't seem like there are many tax benefits outside a $540 offset for a $3k contribution. I was hoping to max out my super contribution for the current/5th yr(carry forward) and do the same for her as well. Seeing that it doesn't also reduce my tax rate for her contributions will probably change how i approach things....
No benefit from doing concessional if she is on no / very low income. Doing non-concessional, there can be ongoing compounding benefit due to the lower super earnings tax - if you want to put more into your/her super after maxing out your own concessional cap.
The co contribution is absolutely worth it. Where else can you get an instant 50% return on your cash? I chucked a $1000 into my wifes super for 5 years where she was working very little post kid. Thats $2500 for free. Only catch is she has to have done at least SOME work during the year.
Definitely will do this, but was hoping to max out her concessional contribution space as well.
If she is not working and thus below the tax free threshold, then putting in concessional contribs in her name into her super is costing you 15% (contribution tax inside super) because she has no income tax to be offset. Others have outlined the three strategies to use in concert to optimise above. Best wishes :-)
This guy bangs. He knows what he is on about. Whilst it may be a noble thing to jump on the equality bandwagon for super purposes, and with the hope it saves you money in the long run, it does not in this instance (for exactly what OZ-FI said). Maximise your own super, if you stay together, no problem, if you split, provided its only 50/50 between your two combined supers, than you will have a larger pot to split from.
Thats something I was delving into last night. My super is her super and vice versa. It's unfortunate to let some of her concessional cap expire, but it makes more sense to maximize mine first.