Enhanced Contribution Splitting Effect

17 Jan 2023

Written by

David Busoli, Principal

A spouse contribution split enables members to relegate after-tax concessional contributions to an eligible spouse who will be;

  • under preservation age or
  • between preservation and 65 and not retired or
  • between 60 and 65 and has not terminated gainful employment after age 60

The amount that can be split is 85% of the previous year’s contribution based on the lesser of the amount of the concessional contribution made or the allowable cap in the year of contribution.

Interestingly, contributions made under the increased cap provided by the 5-year unused concessional contributions rule may also be split.

The split is treated as a rollover so does not reduce the contributions originally made for the member for reporting and contribution caps purposes.

For higher balance members, splitting can result in an increased entitlement to make non-concessional contributions by lowering their total super balance to under any of the three non-concessional cap pivot points. For lower balance members, it may provide access to the 5-year unused concessional contribution entitlement by keeping, or lowering, their total super balance to below the $500k threshold.

Importantly, the split can generally only occur in the year following the year of contribution. This means that its effect on each member’s future contribution entitlements is delayed as a concessional contribution made in the 2022 year is not split until the 2023 year so the lowering of the total super balance does not have an effect until the 2024 year, based on the total super balance at the end of the 2023 year.

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