Q&A: Contributing a lump sum into my partner's superannuation, or my own? July 6th, 2023

There are a number of advantages and very few disadvantages in what you have proposed.

That said, there are a number boxes you will need to tick to take full advantage of the two areas affected, namely tax and potentially Centrelink.

If your wife’s taxable income for the year is less than $37,000 and you use part of the inheritance to make a contribution to her account, you can benefit from a spouse superannuation contribution offset of 18 percent on deposits of up to $3,000.

In simple terms, this could boost your own tax refund by up to $540 if $3,000 of the payment to her super is made by you. Next, if your wife is doing any work and this represents 10 percent or more of her taxable income for the year, a $1,000 contribution on her part would attract the $500 co-contribution, provided her total income for the year is less than $43,445.

The co-contribution shades out at the rate of 3.33 cents per dollar until her income reaches $58,445. Next, and depending on her taxable income, she could make a concessional (tax deductible) contribution of up to $27,500 this financial year and this could substantially reduce any tax liability she has and potentially boost her tax refund.

If your wife has not previously made use of the full concessional contribution caps in the past 5 years and her total super balance is less than $500,000, you wife can apply the unused amounts an claim it this year.

The total available this year is $132,500. From this subtract any personal deductible contributions she has made, amounts that were salary sacrificed and finally, any employer contributions over the 5 year period.

If for example, this totalled $52,500, she has $80,000 available as a single tax deductible contribution.

Lastly on the tax front, make sure that if she claims a tax deduction, it doesn’t bring her below $21,884. This is the “magic” figure where below it, you don’t pay tax. Any amount claimed as a concessional contribution is subject to at least 15 percent contributions tax.

On the Centrelink front, any monies held in super accumulation phase are exempt from Centrelink means testing which in both cases, will be when you reach 67. Potentially, you could claim a full or part pension at 67 and the more money that is in your wife’s name, the less that is counted towards means testing. Your eligibility will depend on your total income and assets at that time.

Lastly, remember that in order to access your super you must have “ceased employment since turning 60”. It would mean that in order to withdraw any funds, your wife will need to have ceased any job since turning 60. It would not need to be her main job but could be as little as a two – week part time role.