Contributions made on behalf of your spouse to a complying superannuation fund or a retirement savings account (RSA) may be eligible for a tax offset.

The 2019/2020 tax rules allow you to claim an 18% tax offset on super contributions up to $3,000 on behalf of your spouse. While you are able to contribute more than $3,000, there will be no spouse contribution tax offset over this amount. The amount you can claim depends on your spouse’s annual income:

• $540 for spouse income of $37,000.
• $360 for spouse income of $38,000.
• $180 for spouse income of $39,000.

The tax offset may be available for individuals who meet the following eligibility requirements:

• Your spouse’s assessable income, fringe benefits amounts and employer superannuation contributions equate to under $40,000.
• Contributions made on behalf of your spouse were not deductible to you.
• You and your spouse were Australian residents at the time of contributions.
• Your spouse did not have non-concessional contributions that equated to a higher amount than their non-concessional contributions cap, or they did not have a total superannuation balance of $1.6 million or more at 30 June 2018.
• Your spouse is younger than their preservation age, or are not retired while being between 65 and their preservation age.

Under Australian superannuation law, your spouse can be either:

• Your partner who you are married to and live with, or;
• Your de facto partner, who you live with on a genuine domestic basis.

The spouse contributions tax offset can be claimed on your tax return.

Depending on your relationship, you may have discussed with your partner the prospect of marriage. Or you might be more comfortable remaining in a long-term de facto relationship (especially since many de facto relationships have similar rights as those of a marriage).

You might share a lot of things with your partner (such as a mortgage, a family, or a car), but did you know that you might be able to boost their super for them?

Specifically, if you (or your partner) were unable to work for a length of time, such as during maternity/paternity leave, unemployment or are a single income household, the super fund of the non-working part of the pair might not be increasing. As a result, the retirement savings held in super for one member of these households may not be increasing as exponentially fast as the working member.

The good news is that when in a relationship, a spouse can boost their non-working partner’s super fund with their own contributions. The best part? It could be a tax write-off for the working spouse.

Under Australian superannuation law, a spouse can be a legally married partner with whom you live or your de facto partner. That gives additional benefits to those in de facto relationships, who can choose (if one member of the relationship isn’t working or earns less) to boost their partner’s super fund. A spouse must also be younger than 75 years old when you make the contribution.

One of the primary losses of super gains that can occur is a result of maternal or paternal leave. If you and your spouse are thinking about starting a family and may have to take time off work during the pregnancy, spousal contributions can be a great way to continuously inject funds into super so that the gap from the pause in employment can be mitigated.

If you are looking to help your spouse’s super grow, there are two ways that you can go about it.

• Making a Spouse Contribution to their super account
• Arranging for Contribution Splitting (also known as Super Splitting)

Spouse superannuation contributions can now be made for spouses earning up to $40,000 per year. If a spouse earns less than $37,000, the maximum tax offset of $540 can be claimed when contributing a minimum of $3,000 to their super. Anything contributed that is more than $3 000 will not receive the spouse contribution tax offset.

You will not be able to claim the tax offset if:

• A spouse has exceeded their non-concessional contributions cap for the financial year or,
• Their super balance is $1.6 million (for 2020/21) or more on 30 June of the previous financial year in which the contribution was made.

Another way to inject funds into your spouse’s super is to choose to have some of your own super contributions put into their super account. This is fine as long as they have not reached their preservation age yet, or are between their preservation age and 65 years and not retired.

Super contributions can only be split in the financial year immediately after the year in which the contributions were made or in the same financial year as the contributions were made. This is only if your entire benefit is being withdrawn before the end of that financial year as a rollover, transfer, lump sum or benefit.

Contributions can be split in two different ways.

• Employer contributions – the most common form of super contributions to split
• Personal tax-deductible contributions – money that you deposit into your super and claimed a tax deduction.

Spouse contributions are generally treated differently to contributions your spouse splits with you.

If your spouse makes a contribution for you, it counts towards your non-concessional contributions cap – not your spouse’s contribution caps. If you are currently employed by your spouse, any contributions that they may have made in this role are reported as employer contributions (not spouse). They may also include amounts transferred from your spouse’s or ex-spouse’s FHSA under a family law obligation.

If you are looking into spousal contributions into super, it is best to seek the advice of your financial advisor or superannuation provider, to best determine what path you should take.

The ATO has issued a warning for Australians to be aware of scheme promoters that promise to allow you to withdraw your superannuation early, and illegally.

Individuals can legally withdraw super when they turn 65, even when they haven’t retired, are at their preservation age and retire, or under the transition to retirement rules while continuing to work. Super can only be accessed early under circumstances that mainly relate to specific medical conditions or severe financial hardship.

The ATO is taking action to shut down promoters who tell people they can gain access to their super before they are eligible to by setting up a self-managed super fund (SMSF), which is illegal. There has been a number of schemes that encourage individuals to channel money inappropriately and deliberately to avoid paying tax.

Penalties for involvement in illegal super schemes include fines up to $420,000 for individuals and up to $1.1 million for corporate trustees. An individual may also lose their right to be a trustee of their superannuation fund or, in some cases, jail time up to five years.

Fund trustees or members who have knowingly been involved in a scheme or been approached by anyone claiming that they can withdraw their super early should contact the ATO immediately to advise of the situation and avoid further penalties.

The 2019-2020 Federal Budget suggested a deferral of the extension of SuperStream to self-managed superannuation fund (SMSF) rollovers from 30 November 2019 to 31 March 2021. The commencement of this deferral has recently been confirmed by the government.

The deferral will coincide with the $19.3 million that will be provided to the Australian Taxation Office (ATO) over three years from 2020-21, enabling electronic requests to be sent to superannuation funds for the release of money required under a number of superannuation arrangements. This change applies from 31 March 2021.

With the combined date for both bringing electronic release authorities into SuperStream and allowing SMSF rollovers, changes needed to update SuperStream will only need to be undertaken once. The deferral aims to reduce administrative costs for funds and allows for a more integrated design of SuperStream.

First introduced in 2015, SuperStream is a government standard for processing superannuation payments electronically in a streamlined manner. Currently, SuperStream can only process rollovers between two APRA funds electronically but with the change will see this process extend to SMSFs. This means rollovers between an APRA fund and an SMSF can be processed through SuperStream later this year, and the time taken could even be reduced to three days.

Regulations for the deferral to put into effect will be made promptly.

Property is a common investment option for SMSFs, however, the ATO has a number of regulations SMSF owners need to be wary of. The ATO is particularly concerned with those using SMSF assets to invest in property in a way that is detrimental to retirement purposes.

To ensure you do not breach provisions of the Superannuation Industry (Supervision) Act 1993 (SISA), here is a breakdown of the ATO’s common regulatory concerns:

• Whether arrangement amounts to your SMSF are being made to purposes outside of the sole purpose test (referred to as a collateral purpose).
• Whether your SMSF meets operating standards such as record-keeping, ensuring assets are appropriately valued and recorded at market price, and keeping SMSF assets separate from members’ assets.
• Whether the arrangement includes the SMSF acquiring assets from a related party.
• If the arrangement features the SMSF borrowing money and meets borrowing provisions.
• Whether the SMSF has contravened the in-house assets by exceeding the level of in-house assets allowed.
• Cases of illegal early release of superannuation when SMSF arrangements do not meet relevant payment standards.

Also, keep in mind that you cannot improve a property or change the nature of a property while there is a loan in place. While you can look to make additional contributions to your SMSF to speed up the loan repayment process, you will be precluded from making further contributions to your SMSF if any outstanding loans in your super balance exceed $1.6 million.

In the case that any of the ATO’s regulatory concerns apply to you and your SMSF’s involvement with property investment, confirm your situation and report your circumstances to the ATO. Additional regulatory matters regarding income tax such as non-arm’s length income (NALI) provisions as well as GST need to be reported as well.

SMSF funds can provide pension or lump sum benefits during retirement. Retirement is a condition of super release if you have reached your preservation age. Depending on your date of birth, your preservation age will be between 55 and 60. The benefits from your super are tax-free once you are over the age of 60. 

If you plan to start a super pension income stream, then the funds from your accumulation account need to be transferred to your retirement account to fund your pension. Your retirement account has a cap of $1.6 million, so you can transfer that amount as a lump sum but no more. The earnings on these funds are tax-free. 

Each year, you need to withdraw a minimum percentage of your account balance from the retirement fund. This minimum percentage will depend on your age.

Alternatively, you can start your Transition-to-retirement pension if you have reached your preservation age but you are still working. However, unlike the funds that support your super pension once you begin retirement, these are taxed at 15%. 

One of the downsides of running a self-managed super fund (SMSF) are the fees, but making sure you know what SMSF expenses are deductible can help you make the most out of your money.

Many expenses required for running an SMSF can be deductible unless they are related to gaining non-assessable income, such as exempt current pension income. Expenses that may be deductible include:

Management and administration fees:
These can include costs involved in preparing trustees’ minutes, postage fees and stationary, or other fees required for the running of an SMSF. If your fund earns both assessable and non-assessable income, then the costs can be apportioned. If the costs are completely incurred for the purpose of SMSF management and administration, such as obtaining an electronic service address to meet data standards requirement for the fund, then no apportionment is necessary.

Audit fees:
SMSFs require financial and compliance audits every year before lodging an annual tax return. The costs of getting an audit are deductible as they are associated with meeting lawful SMSF obligations. However, if your SMSF gains both assessable and non-assessable income, your audit expenditure must be apportioned accordingly.

ASIC annual fee:
The Australian Securities and Investments Commission (ASIC) annual fee required for your SMSF may also be tax deductible for corporate trustees – special purpose companies whose sole purpose is to act as a trustee of a regulated super fund.

Investment expenses:
Certain expenses relating to investment can also be tax-deductible for assessable income. If the investment-related advice covers non-assessable income, the fee can be apportioned. Some investment-related expenses include:

• Interest expenses
• Management fees or retainers paid to investment advisers
• Bank fees, rental property costs, brokerage expense or other expenditure related to your investment portfolio
• Investment adviser fees.

SMSF expenses that are not tax-deductible include:

• Fines for non-compliance
• Legal fees that are capital in nature
• Expenses incurred to gain assets backing tax-exempt income streams.