Can you contribute to someone else's super? Rules explained

Can you contribute to someone else's super? Yes, but there are rules - and it's mostly beneficial for couples. Here's how spouse contributions, contribution splitting and tax offsets work.

From salary sacrificing to personal contributions, many Australians will be aware the various ways in which they can boost their superannuation.

And plenty do. More than half (54%) of super members have made at least one additional contribution to their retirement savings, research from Vanguard Australia suggests.

What many people might not realise is that it's also possible to contribute to another person's super.

"Contributing to someone else's super is often about helping build financial security within a family," Danielle Carpenter, a private wealth adviser at UniSuper, explains.

"It can be particularly valuable when one person has a lower super balance because they've either taken time out of the workforce, work reduced hours, or earn less than their partner."

So, who can you contribute to? What are the benefits? And what are the risks? Here's what you need to know.

Can you contribute to your partner's super?

Person-to-person super contributions typically occur between couples. These are called spouse contributions.

As Carpenter notes, the driving motivator tends to be addressing inequalities in retirement savings after one partner has taken time off work for caring responsibilities. But it's not the only reason.

"For some couples, it's about maximizing tax efficiency. For others, it's about building a stronger financial position as a household and ensuring both partners have adequate retirement savings.

"I've also seen couples that use it as a strategy in broader retirement planning, particularly in the years leading up to retirement when they're reviewing how their assets are structured."

The question is, how can you make a spouse contribution? Well, there are two different options for married and de facto couples: pre-tax contributions and post-tax contributions.

What is super contribution splitting?

The first strategy is contribution splitting. This involves using pre-tax or concessional contributions which have already been made to your super.

"That might be the 12% government-mandated contribution that comes from an employer. Or it might be from a salary sacrifice," explains Peter Treseder, education manager at AustralianSuper.

"Someone can split up to 85% of those concessional contributions - that have already gone in to their own super - with their spouse.

"This may be beneficial if your account is approaching thresholds that may limit you putting more money into super, or limit you in the way you can put money into super."

Members can generally apply to split their contributions in the financial year after the concessional contributions were made by lodging a superannuation contributions splitting application with their fund.

How do after-tax spouse contributions work?

The second option is making a post-tax contribution to a spouse from your own savings - money that has already been taxed.

"If your spouse is earning less than $37,000, you would be eligible for a tax offset - a rebate of tax," Treseder says.

Contributors will still be eligible for a reduced rebate if their spouse earns up to $40,000, but it cuts off after that point.

"The way that's calculated is 18% of what you contribute, so if you put in $1000, you would get $180. The maximum offset is $540, which is 18% of a $3000 contribution.

"So, it's really good for a non-working spouse, or even a spouse that has returned to the workforce part-time if they are under that threshold."

The offset can then be claimed when the contributing spouse files their next tax return.

What are the rules and limits for spouse super contributions?

Before rushing out to set up a transfer, Carpenter suggests that it's worth thinking beyond any immediate tax benefits and considering factors such as contribution caps and longer-term goals.

"One of the biggest mistakes is focusing solely on the tax benefit without considering the broader strategy. The contribution should be in support of the couple's overall retirement objectives, not just to generate a short-term tax outcome.

"Another common issue we see is people not checking their contribution caps and their eligibility requirements before contributing. This can lead to exceeding contribution caps and creating unintended tax consequences.

"I think it's also important to remember that once the money is contributed, it's generally preserved until a condition of release is met."

Can you contribute to a family member's super?

It may be common for contributions to be made between couples, but what if a parent wants to contribute to their child's super? Or someone wants to top up their parents' super before they retire?

Provided the super fund accepts the contribution and the relevant rules are met, Carpenter says that it may be possible to contribute to another person (who isn't a spouse).

"However, the tax concessions are commonly associated with spouse contributions and are generally specific to spouses and de facto partners.

"Where someone is considering contributing to a child or another family member, it's important to understand how the contribution will be treated - whether there are any contribution cap implications for that individual receiving the money as well."

Should you get financial advice before making a super contribution?

For Treseder, super members thinking about contributing to someone else should make sure that they're own retirement goals are on track first.

"It's a bit like the airplane scenario: fit your own mask before helping others. Sort your super out before you sort out your partners."

He also recommends seeking financial advice before making any decisions, as it's not a strategy that will suit everyone.

"AustralianSuper - and most super funds - provides an advice line where people can talk to a financial planner over the phone to get advice around contributing in the most effective way.

"When I talk to members about getting money into super, it's about finding the most effective approach. The way you've been doing it for years may not be the best option anymore."

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