You can transfer some of your super contributions to an account for your spouse, which may save tax or allow you to access your super earlier.
What is contribution splitting?
Contribution splitting is a process that allows you to transfer some of the contributions made to your super into an account for your spouse (including de facto of the same or different sex).
How does it work?
You may transfer contributions to your spouse’s account once per financial year. Only contributions made in the previous year may be split.
You may only split concessional (before-tax) contributions. These are generally your salary sacrifice and your employer’s contributions.
You may transfer to your spouse’s account up to 85% of the gross concessional contributions made to your account. This is the same as the net contribution after 15% contribution tax has been deducted.
If you have a defined benefit account you will usually only be able to split the voluntary contributions you have made.
What are the benefits?
There are two possible benefits of splitting your contributions with your spouse. It may allow access to your superannuation earlier and could save you tax.
If your spouse is older than you, they will reach their ‘preservation age’ sooner. This is the age at which superannuation may be accessed.
Your spouse will then be able to start a super pension, or if they have retired from the workforce, take a lump sum.
If the contributions had remained in your account, you would not have been able to access them until you reach preservation age.
If you or your spouse intend to access a lump sum from super before reaching age 60, contribution splitting could save you tax.
When a lump sum is taken, a tax- free threshold is applied to the taxable component. The threshold is currently $195,000. This means an individual may access up to $195,000 from their taxable superannuation without paying tax between their preservation age and age 59.
Splitting your contributions could give you access to two full tax- free thresholds when this may not otherwise have occurred.
|Date of birth||Preservation age|
|Before 1 July 1960||55|
|1 July 1960 to 30 June 1961||56|
|1 July 1961 to 30 June 1962||57|
|July 1962 to 30 June 1963||58|
|1 July 1963 to 30 June 1964||59|
|July 1964 and after||60|
|Important note: Your spouse must be under age 65 and if aged between 55 and 65 must not be retired to be eligible to receive your split contributions.|
Jody and Mark were both born before 1 July 1960, so they both have a preservation age of 55. Mark intends to retire at 55 and take some of his super as a lump sum.
Jody’s superannuation balance is $25,000 and Mark’s is $390,000. Jody has not accumulated much superannuation because she has only worked part-time in the past and left work to take care of their children.
Mark does nothing and the couple access $390,000 as a lump sum when they reach 55. The tax situation follows.
Jody’s balance is $25,000, and she takes the whole balance tax-free. Mark accesses $365,000 from his account to make up the total of $390,000 and pays $28,900 tax*.
Mark transfers some of his super contributions to Jody’s account each year and when they reach 55, Jody has a balance of $195,000 as a result.
Mark and Jody each access $195,000 from their accounts to make up the total of $390,000 and pay no tax because of the tax-free threshold.
This strategy is only applicable when accessing super before age 60. After 60 all payments from superannuation are tax-free, regardless of the amount.
To make a spouse contribution splitting application, simply contact our Client Services Team on 1300 660 027.
* Tax of 17% including the Medicare levy on the amount above the tax-free threshold of $195,000. Assumes total balance is made up of taxable component.
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- Do I have enough money to retire?
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- Effective contribution strategies
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This fact sheet is issued by the Trustee of The Victorian Independent Schools Superannuation Fund (ABN 37 024 873 660, RSE Registration number R1000436, MySuper Authorisation 37024873660599) VIS Nominees Pty Ltd (ABN 11 006 586 367 Australian Financial Services Licence number 235097. Registrable Superannuation Entity Licence number L0000321). It contains general advice only. In preparing this fact sheet, the Trustee has not taken into account your objectives, financial circumstances or needs. Before making any financial decisions, you should consider your personal circumstances and seek appropriate independent advice. The individual case study samples are for illustrative purposes only.