Splitting super contributions between spouses can result in tax advantages that will help you grow your joint retirement nest egg.
You must meet the eligibility requirements and follow tax rules to avoid incurring penalties from the ATO.
Advantages of splitting super contributions
Some advantages gained from contribution splitting include:
- Gaining access to concessionally taxed or tax-free lump sum super withdrawals earlier
- Increasing non-concessional contributions you can make by reducing your total super balance
- Gaining earlier access to contributions
- Maximising tax-free pension benefits
Eligibility for splitting super contributions
Your ATO application will only be deemed valid if:
- The person you are splitting your contributions with is a spouse defined by marriage, a registered relationship or a de facto relationship
- Your spouse is less than the preservation age listed on the ATO website or aged between their preservation age and 65 years
- You have not already applied in the financial year where the trustee of your fund has received your application
- The amount of benefits you have used does not exceed the maximum amount that can be split
Types of contributions
You can make taxed splittable contributions (TSCs) or untaxed splittable contributions (USCs).
- Transfer up to 85 per cent of a financial year’s TSCs subject to the ATO requirements. Advise your super fund of personal contributions you will claim a tax deduction for. You may also include contributions made for you by your employer, and salary sacrifice contributions.
- You can transfer 100 per cent of USCs for the financial year provided that it does not exceed concessional contribution caps for that year.
If you have any questions about splitting super contributions, make an appointment to see the Walshs team – you can now book online here – or call Walshs on 07-3221 5677.
As this advice is general in nature please do not hesitate to contact one of our adviser accountants or financial planning advisers if you have a query that is specific to your circumstances.