Superannuation contribution splitting allows individuals to ‘split’ (or transfer) a portion of contributions made to a regulated superannuation fund in the previous financial year, into their spouse’s superannuation balance.
How much can you split?
For contributions made in the preceding financial year a member of a regulated superannuation fund may split the lesser of:
- Eighty five percent of the Concessional contributions for the financial year comprising employer contributions (including salary sacrifice and employer contributions) and personal deductible contributions.
- The concessional contribution cap is $25,000 per annum.
Please note that you may no longer split after-tax (non-concessional) contributions which are made after the 6th of April 2007.
When must you make an application to split contributions?
In order to split a portion of taxed/untaxed contributions into your spouse’s superannuation fund, you must make an application to your fund to split a portion of the eligible contributions.
In order to be eligible to receive split contributions, the recipient spouse must be either younger than preservation age, or if older than preservation age and younger than 65, they must indicate that they have not yet retired and are gainfully employed.
It is not obligatory for superannuation funds to offer this service, and we suggest that you consult with the Trustee of your current superannuation fund to determine whether this service is offered.
- Where you have a single large balance and are considering making a large withdrawal from superannuation which is in excess of the low-rate cap of $175,000, you may be able to make a tax saving by taking advantage of contributions splitting. If you split a portion of the previous year’s contributions into a spouse’s balance, you effectively gain access to two low-rate thresholds, potentially reducing taxation.
- Effectively allows you to have some partial control over the growth of each member’s respective accumulation balances. There may be some value in that contributions made to a younger member of a couple’s superannuation balance may be split into the older spouse’s balance, providing access to the funds sooner.
- Where one member of a couple is approaching age pension age, Centrelink entitlements may be enhanced as a result of splitting contributions to the younger spouse and so reducing the older spouse’s assessable assets.
- When combined with the Transition to Retirement Pension strategy, splitting contributions from the younger spouse to the older spouse should provide additional superannuation benefits for retirement.