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Splitting your super contributions is when you nominate to transfer a portion of your Superannuation to your spouse.
There are two main types of contributions that can be made;
- Taxed splittable contributions: "the amount must be no more than the element taxed in the fund of the taxable component that a member would receive if they withdrew all their super benefits." (Source: ATO)
- Untaxed splittable contributions: "the amount must be no more than the element untaxed in the fund of the taxable component that a member would receive if they withdrew all their super benefits." (Source: ATO)
The primary reason for people to split their super contributions is to share their retirement savings with their spouse. By doing so it opens up opportunities such as giving access to the low rate threshold if you and your spouse are younger than 60. It also allows you access to super benefits sooner when you split contributions to a younger spouse. Splitting super contributions can also assist non-working or low income spouses by paying for insurance premiums or providing them with superannuation. Finally, it opens the opportunity to protect the couple from changing legislation which may effect their retirement savings.
You can be any age to split your super but your spouse needs to be younger than their preservation age or between their preservation age and 65 and not retired.
To split your super contributions, you can lodge an application form to your super fund. For it to be successful, your application should be lodged in the financial year following the year the contributions were made. An alternative option is, if the entire benefit is being withdrawn before the end of the financial year as a transfer, rollover, lump sum benefit or combination of these, it can be submitted in the same financial year. You are unable to make a contribution if you have already applied in the same financial year and if the amount of the shared benefit is more than the maximum allowed.
Splitting contributions may not be right for everyone. If you’re considering splitting your contributions with your significant other and want to maximise the financial gain from doing so, it may be in your best interests to speak to an Independent Financial Planner.