When you’re looking into your superannuation, you may come across the term splitting superannuation contributions. When you split your contributions, it means that you move or transfer some of the contributions that you’ve made to your super account to that of your spouse.
In this article, you can find out more about splitting superannuation contributions:
When can you apply to split your superannuation contributions?
While you can apply to split your contributions no matter what your age is, your spouse should be less than the preservation age that is applicable to him/her, or aged between the preservation age and 65 years. He/she must also not be retired.
You can apply to split your contributions in the financial year right after the year in which you made your contributions or the financial year when you made the contributions, but only if your whole benefit is being withdrawn before that financial year ends. It can be a transfer, a rollover, a lump sum benefit, or a combination of these.
What contributions can you split?
The amount that you can transfer to your spouse each financial year is affected by a number of factors. For instance, it depends on the amount and type of contributions that you made in the previous financial year. It is also affected by the contributions that you made in the current financial year. However, this will apply only if your entire benefit will be rolled over, transferred or withdrawn in that financial year.
You can split taxed contributions as well as untaxed employer contributions.
What are the benefits of splitting superannuation contributions?
When the younger spouse splits the concessional superannuation contributions with the older spouse, this will lead to a larger pool of funds for the older spouse when he/she becomes eligible to receive the pension and get the super benefits.
Splitting contributions is also beneficial in terms of tax, when one spouse has a higher income than their partner. For a couple who are between 55 and 59 years old, the spouse with a higher income can split the contributions with the spouse with a lower income who was a lower tax rate and therefore, the pension payments under his/her name will come with a lower tax liability.
It may also be helpful to use a superannuation calculator for estimates on how much you have and how much you need when you retire.
Do you have other ideas when it comes to splitting superannuation in Australia? You can share your insights in the comments section.Read More →