Category: Business Advice

Spouse superannuation contributions & tax offset up to $540

Under the current 2021-22 tax rules, you may be able to claim an 18% tax offset on super contributions up to $3,000 that you make on behalf of your non-working or low-income-earning spouse. You can contribute more than $3,000, but you won’t receive the spouse contribution tax offset on anything above $3,000.

If your spouse receives $37,000 or less in assessable income, then you can access the maximum tax offset of $540, provided an after-tax contribution of at least $3,000 is made. The tax offset is then progressively reduced until the tax offset reaches zero for spouses who earn $40,000 or more in assessable income in a year.

You will be entitled to claim a spouse tax offset of up to $540 in your 2021-22 tax returns if:

• the sum of your spouse’s assessable income (excluding any assessable first home super saver released amount), total reportable fringe benefits and reportable employer superannuation contributions is less than $40,000

• the contributions you made on behalf of your spouse were not deductible to you

• the person was your spouse when you made the contribution

• both you and your spouse must be Australian residents (for tax purpose) when the contributions were made

• when making the contributions you and your spouse were not living separately and apart on a permanent basis

• your spouse has not exceeded their non-concessional contributions cap for the financial year

• your spouse’s total superannuation balance on 30 June of the previous financial year is below general transfer balance cap of $1.6 million.

• the contributions must not be made to satisfy a family law obligation to split contributions with your spouse

You can claim the tax offset for more than one spouse during financial year if you satisfy the eligibility rules for each spouse. The tax offset is the lesser of the sum of the offset entitlement for each spouse, or $540.

To claim the tax offset, you need to complete the superannuation contributions on behalf of your spouse question in the supplementary section of your tax return. You also need to complete spouse details – married or de facto in your tax return.

What I need to do?

If you are eligible:

• Make an after-tax contribution up to $3,000 before 30 June 2022.

• Lodged your tax return for the year ending 30 June 2022 in time.

This is a general advice, for more information or to discuss your individual case please contact us.

If you are on a lower income, the Australian Government is contributing 50 cents toward your super for every $1 extra you contribute to your super, up to a maximum of $500 a year. This is called the co-contribution scheme.

Eligibility for the super co-contribution:

You are eligible if:

• your total income (including assessable income, fringe benefits and reportable super contributions) for the financial year 2021-22 is less than $56,112.

• 10% or more of your total income comes from eligible employment-related activities or carrying on a business, or a combination of both.

• you are less than 71 years old at the end of the financial year.

• you did not hold a temporary visa at any time during the financial year (unless you are a New Zealand citizen or it was a prescribed visa).

• you have a total superannuation balance less than the transfer balance cap $1.6 million at the end of 30 June of the previous financial year.

• you have not contributed more than your non-concessional contribution cap.

• make an after-tax contribution before 30 June 2022.

• you have lodged your tax return for the financial year.

How much you will receive depends on your income:

If you earn $41,112 or less in 2021-22, then you will qualify for the full $500 from the Australian Government.

Super co-contribution and tax:

The super co-contribution is:

• Not subject to tax when it is paid to your super fund.

• Not included as income in your tax return.

What I need to do?

If you are eligible:

• Make an after-tax contribution up to $1,000 before 30 June 2022.

• Lodged your tax return for the year ending 30 June 2022 in time.

• ATO will pay co-contribution directly to your super fund account.

This is a general advice, for more information or to discuss your individual case please contact us.

Get ready for your income tax return 2022
Quick and basic check list
Don’t forget to bring following for your income tax return:

• your tax file number
• All your PAYG summaries (Group certificates)
• Interest earned statements from bank, etc.
• Dividend statements, if applicable
• Private health insurance statement, if applicable
• Proof of any other income
• Receipts for work related expenses
• Receipts for donations made, if any
• Any other document or information as applicable in your case.

This is a general advice, for more information or to discuss your individual case please contact us

The MLS is an additional tax and applies to Australian residents for taxation purposes who are high income earners and don’t have an appropriate level of hospital cover. If you or your family do not have an appropriate level of private patient hospital cover you may be required to pay the MLS.

For 2021-22 the base income threshold is $90,000 for singles and $180,000 for families. General cover, commonly known as ‘extras’, is not private patient hospital cover. It covers items such as optical, dental, physiotherapy or chiropractic treatment.

The Medicare Levy Surcharge (MLS) is in addition to the Medicare levy. Depending on your income for MLS purposes, the MLS rate is 1%, 1.25% or 1.5% of:

• your taxable income
• your total reportable fringe benefits, and
• any amount on which family trust distribution tax has been paid.

To be exempt from the MLS, consider having an appropriate level of private patient hospital cover for you, your spouse, or any of your dependants if:

• your annual income is more than $90,000; or
• your annual income with your spouse annual income is more than $180,000.

Medicare levy surcharge income testing

The medicare levy surcharge is income tested against the following income tier thresholds for 2021-22:

For families, the income threshold increase by $1,500 for each MLS dependent child after the first child.

This is a general advice, for more information or to discuss your individual case please contact us.

Quick and basic check list

Get ready for your income tax return 2020

Don’t forget to bring following for your income tax return:

• your tax file number
• All your PAYG summaries (Group certificates)
• Interest earned statements from bank, etc.
• Dividend statements, if applicable
• Private health insurance statement, if applicable
• Proof of any other income
• Receipts for work related expenses
• Receipts for donations made, if any
• Any other document or information as applicable in your case.

This is a general advice, for more information or to discuss your individual case please contact us.