Contribution splitting is done by rolling a member’s previous year contributions to their spouse’s super.
What contributions can be split?
The most common splittable contributions are employer contributions, salary sacrifice contributions and personal deductible contributions.
Who can receive the split?
Only the spouse can receive the split, and the receiving spouse must be under the preservation age or between the preservation age and age 65 and not retired.
The age/retirement test is assessed at application, not at the time the contributions were made and not at year-end.
How to apply?
The SMSF trust deed needs to permit contribution splitting.
A member needs to lodge an application, NAT 15237 or equivalent, with the fund in the financial year immediately after the one in which the contributions were made.
A member can apply within the same financial year the contributions were made, but only if the entire benefit is being rolled over, transferred or paid out before the end of that year.
How much can be split?
The maximum splittable amount is the lesser of: 85% of taxed splittable contributions made in the previous financial year (reflecting the 15% contributions tax) and the contributing member’s CC cap in the previous financial year.
Where a member is eligible to use carry-forward amounts, their increased concessional contributions cap is used to determine the maximum splittable amount.
How is it reported?
Contributions-splitting is treated as a rollover to the receiving spouse. When the couple is in the same fund, the rollover can be done by a journal entry.
Why does contribution splitting matter?
Contribution splitting can help couples access superannuation benefits earlier by directing eligible contributions to an older partner’s account.
Contribution splitting can help balance superannuation savings between spouses and maximise each partner’s ability to transfer benefits into the tax-free retirement phase.
Contribution splitting can also help manage a member’s total super balance, which can affect their ability to make non-concessional contributions, and liability for Division 296 tax from FY2027.