Forman Financial Services

Split concessional contributions to a spouse

Super contribution splitting allows a member to transfer an amount of concessional contributions made during the year to their spouse’s super account, either in the same or another fund.

A contribution that is subsequently split only counts toward the contributing spouse’s concessional cap.

Subject to the super fund’s governing rules (as contribution splitting is voluntary for funds to offer), super contribution splitting makes it possible for a member to split their CCs to their spouse’s super where the receiving spouse either:

•    is under preservation age, or
•    has reached preservation age but is under age 65, and has not met the retirement condition of release.

Benefits of super contributions splitting can include:

•    equalising super accounts between spouses. This may help to keep each member of the couple’s super benefits under the
transfer balance cap (ie currently $1.6 million) in the long run. In addition, it may assist in optimising total super balances
•    which impacts eligibility for a number of superannuation measures including the ability to make non-concessional
•    funding life and TPD insurance premiums for a low income or non-working spouse through their super.
•    improving a client’s Centrelink position by splitting contributions to the younger spouse, who is under age pension age.
•    accessing superannuation benefits earlier by splitting contributions to the older spouse, or the spouse planning to retire first
after reaching preservation age.

When determining the maximum splittable amount under the contribution splitting rules, the legislation states it is the lesser of:

•    85% of concessional contributions made in the previous financial year, and
•    the concessional contributions cap for that financial year.

When determining ‘the concessional contributions cap for that financial year’, it includes the higher concessional cap that may apply under the carry forward provisions.

For 2019/20, this applies where an individual has:

•    unused concessional contributions cap space from 2018/19, and
•    concessional contributions of more than $25,000 in 2019-20, and
•    a total super balance below $500,000 at 30 June 2019.

SMSF can seem complex.  We have a special offer for general advice for $225.00.
Please click here for more information.
For more information on this subject feel free to get in touch with us click here
To receive free updates on relevant information click here
To read more about our specialised service offers for SMSF please click here