1 July 2021 (updated annually every 1 July)
A super splitting strategy allows single income families to share the ongoing accumulation of superannuation in a similar way to dual income families.
Certain superannuation contributions can be split with your spouse, either within the same fund or to a different fund, providing your super fund permits it. It's important to note, however, that only certain contributions can be split, not the account balance itself and any contributions that are split are counted towards the contributing spouse's contribution cap, not the receiving spouse's cap.
The applicant's spouse is held to be the 'receiving spouse' and must be a person who is either married to the applicant, is in a registered relationship (under certain state or territory laws) or lives with them on a genuine domestic basis in a relationship as a couple. To receive a split contribution, the receiving spouse must be under preservation age or, if between preservation age and 64 years, needs to have met certain conditions, such as, not being retired.
You may split the following concessional contributions:
The maximum amount of contributions you can split in a financial year, is the lesser of:
You can apply to split contributions either:
* Note: You may want to check with your fund if the application must be received by a certain date.
You may not split the following contributions:
Harry, aged 53, is working full time and is married to Ruth, aged 50, who is working part time. They have decided to sell their investment property, owned jointly, creating a net capital gain of $50,000 each. Harry and Ruth didn’t use their full concessional contributions cap in the two previous financial years. They have unused concessional contributions cap of $31,000 and $40,000 respectively. If eligible to use their unused concessional contributions cap, they could make larger personal tax-deductible super contributions to reduce the tax payable on the capital gain.
Eligibility to use the unused concessional contributions cap in the 2021/22 financial year includes a requirement for the individual’s total super balance as at 30 June 2021 to be less than $500,000. Ruth is well below this balance and can use her unused concessional contributions cap to reduce her tax payable on the capital gain. Unfortunately, Harry’s total super balance is just over this amount and he cannot use his unused concessional contributions.
If Harry had been contribution splitting to Ruth, his total super balance at 30 June 2021 would have been less than $500,000 and he would be eligible to use his unused concessional contributions cap.
The following table compares the outcome for Harry if he had super split to Ruth making him eligible to use his unused concessional contributions cap.
|Not eligible to use his unused concessional contributions cap|
Eligible to use his unused concessional contributions cap after contribution splitting
|Net capital gain||$50,000||$50,000|
|Employer super support||$10,000||$10,000|
|Unused concessional cap from current year||$17,500||$17,500|
|Unused concessional cap from prior years||Not eligible||$31,000|
|Personal tax-deductible super contributions||$17,500||$48,500|
|Tax on personal tax-deductible super contributions||$2,625||$7,275|
|Tax on taxable income||$36,742||$24,749|
|Total tax payable*||$39,367||$32,024|
*Excludes tax on the employer super support which is consistent across both scenarios.
Harry could have saved an additional $7,343 in tax if he had super split to Ruth, bringing his total super balance below $500,000 at 30 June 2020, allowing him to take advantage of his unused concessional contributions cap.