Superannuation splitting occurs when one partner in a relationship transfers contributions made into their own superannuation account, to the superannuation account of their eligible partner.
It is allowable for a member to split superannuation contributions across to their spouse’s account. A spouse is defined as a person who lives with another in a genuine domestic relationship as husband and wife. This definition includes de facto couples as well as same sex partners.
The rules relating to this strategy allow for 85 per cent of concessional contributions (including contributions made by your employer) to be split.
What superannuation splitting is not allowed?
Spouse contribution splitting does not apply to:
- Contributions rolled over or transferred from another fund,
- Defined benefit interests,
- Amounts subject to a super and divorce payment split or payment flag,
- Employer ETPs, or
- Small business CGT exempt roll over amounts.
The trustee will allow contributions to be split across to the spouse’s account only if they are satisfied that the spouse does not meet the following conditions of release:
- Reached age 55 and is retired from gainful employment, or
- Reached age 65.
After the end of the financial year, the member can ‘split’ or transfer the contribution across to their spouse’s account, where it will be preserved under normal superannuation rules.
Why split your contributions?
Splitting your contributions to a spouse below age pension age (where super is not assessed by Centrelink), allows you to reduce your Centrelink assets, by transferring super to a spouse below age pension age, where it is not Centrelink assessed. Alternatively you can split to an older spouse, who is closer to age 60; the age at which you can withdraw superannuation tax free.
How can Continuum Financial Planners Pty Ltd help?
Superannuation Splitting is one of many helpful wealth accumulation strategies involving superannuation assets and the experienced financial advisers at our office can help you realise the full potential of your superannuation investments: contact us for advice on building financial security for your family: the first meeting will be at our cost.
We acknowledge the contribution from Deutsche Bank through its Desk Caddie for the core content of this article, to which we have added some additional information.
This article was originally published in December 2009: it has occasionally been updated/ refreshed, most recently during February 2020.