SMSF Technical Education & Strategies

Tax rebate for a spouse contribution to a SMSF

An Eligible Spouse Contribution is one in which a person contributes to the superannuation fund of their spouse. Further to this, if certain requirements are met, the contributor may be able to claim a tax rebate.

Firstly, we need to outline what requirements have to be met for a contribution to be classed as an “eligible spouse contribution”, and then we’ll look at what requirements have to be met to enable a tax rebate to be claimed.

For a contribution to be an “eligible spouse contribution”, the following conditions must be met:

The contributor:

- Can be any age

- Must derive their income, profits or capital gains in Australia

- Must not be eligible to claim a tax deduction for the contribution (such as where the receiving spouse is an employee of the contributor).

The receiving spouse:

- Must be the spouse of the contributor at the time the contribution is made

- The contribution must be made to a complying super fund

- Does not need to be an Australian resident or an Australian taxpayer

- Must satisfy the work test if aged between 65 & 69.

- Must not be aged 70 or over.

The definition of spouse includes a de facto spouse, but does not include a person who lives apart permanently from the contributor. Provided all the above conditions are satisfied, a tax rebate may be available for the contributor, where the receiving spouse is either not working, or is a low income earner.

Basically, the contributor receives a tax rebate of 18% of the first $3000 of spouse contributions. i.e. a maximum of $540. Now, if the assessable income + fringe benefits of the receiving spouse is less than $10,800 for the income year, then the contributor gets the full rebate (i.e. 18% x contribution up to $3000). However, if the spouse’s income is over $10,800, the rebate gradually phases out. The rebate is reduced by $1 for every $1 that the spouse’s income is over $10,800. It eventually phases out completely at $13,800. Thus, if the receiving spouse has assessable income + fringe benefits over $13,800 for the income year, no tax rebate can be claimed by the contributor.

Example:

Jim would like to take advantage of the rebate by making a $3000 eligible spouse contribution into his wife’s (Jane) account in their SMSF. Jane’s assessable income + fringe benefits for the income year comes to $9,000. Because Jane’s income is under the $10,800 threshold, Jim would be able to claim the full 18% rebate on the $3,000 contribution i.e. $540. If Jane’s income was $12,500, then the contributions eligible for the rebate reduce by $1,700.

Hence the rebate would be calculated as:
($3,000 – ($12,500 - $10,800)) x 18%, which equals $234.


The contributions are treated as non-concessional contributions, and are generally fully preserved.