Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 45

Advantages of splitting superannuation contributions

A subject we often hear about – but I'm not sure most people understand – is super splitting. What are the rules, how do you do it, when is it worthwhile, and is there any need to do it sooner rather than later?

There are two types of superannuation splitting with a spouse. The first is where a member is able to split concessional contributions up to 85% of the cap limit each year and the other type is for family law settlements. In this article we cover the pros and cons of splitting concessional contributions as permitted by Division 6.7 of the Superannuation Industry (Supervision) Act.

Contribution splitting provides a superannuation member with the opportunity to split up to 85% of concessional contributions received in a financial year with their spouse. As a general rule the split is permitted in the year after the contribution has been received by the fund. However, where a member is closing or rolling over their account in the fund, the split can take place in the year of the concessional contribution.

Share the benefits

The main advantage of splitting is to share the amount saved for retirement between a member and his or her spouse. This can:

  • give access to the low rate threshold for each member if they are younger than 60
  • provide an effective way of providing superannuation to a non-working or low income spouse
  • pay for insurance premiums for a non-working or low-income spouse
  • provide superannuation benefits earlier by splitting contributions to the older spouse
  • improve the client’s Centrelink position by splitting contributions to the younger spouse, or
  • protect the member and their spouse from the impact of potential government proposals.  One example, which did not go ahead thankfully, was the 15% tax that was to be introduced on a member’s income from pension assets in the fund worth more than $100,000. By using contribution splitting, it is possible to keep income in the fund below the relevant threshold.  In the past, splitting of contributions also helped even out a member’s superannuation balance for purposes of his or her Reasonable Benefit Limit.

How splitting rules work

To make the split, subject to the caps mentioned above, under reg 6.44 a member elects the amount he or she wishes to split in the year after the concessional contribution has been made, or in the year of income in which the concessional contribution was made if the account is to be closed or rolled over to another fund.

Contribution splitting is subject to the rules of the fund and is limited to concessional contributions made to an accumulation fund, and the member’s accumulation component (if any) in a defined benefit fund.

Amounts that cannot be split include:

a)    benefits rolled over from another fund

b)    amounts previously rolled over as a contributions-splitting superannuation benefit

c)    superannuation lump sums paid from a foreign superannuation fund

d)    contributions that are not included in the assessable income of the fund, including non-concessional contributions and amounts subject to the capital gains tax cap amount

e)    contributions to a superannuation interest that are subject to a payment split or subject to a payment flag under the family law provisions.

As an example, during the 2012-13 financial year, Jordan, who was aged 60, salary sacrificed $25,000 to his SMSF. The maximum sum that Jordan may split with his spouse Amy is 85% of his concessional contributions up to the concessional cap amount. That is 85% of $25,000 which is $21,250.

Timing the split

In order to make the split, the contribution must first be made to the superannuation fund and credited to the member’s account where it is taxed. The contribution is not made directly to the spouse’s account. The next step is for the member to make an election to split the contribution to the spouse and indicate the amount.

To meet the requirements of a valid application, it can be made prior to the member’s spouse reaching preservation age. An application to split can be made between the spouse’s preservation age (which is 55 for those born before 1 July 1960) and age 65, providing they have not met the condition of release of retirement. Also any application must be for no more than the maximum splittable contribution for the member for the relevant year.

Only one split may take place for concessional contributions received by the relevant fund for each financial year. The ATO has provided a form on its website that can be used by the member and given to the fund that is to make the split.

Once the split has been made, the sum may be transferred to the spouse’s account in any superannuation fund, approved deposit fund or retirement savings account. The amount credited to the spouse’s account does not count against the spouse’s contribution caps for the financial year in which the contribution was made, nor for the year in which the split took place.

Applying this to Jordan’s example, in 2012-13, the following contributions were made to the fund: concessional contributions of $25,000 and $5,000 of non-concessional contributions. The maximum amount Jordan is able to split in 2012-13 is 85% of $25,000, which is $21,250. Jordan will have the whole of the 2013-14 financial year to make an application for the split to his wife.  Once the 2013-14 financial year has ended, Jordan will not be able to make an application to split the contribution made in 2012-13.

Tax components of a spouse splitting amount

A contributions-splitting superannuation amount is treated as a taxable component and does not have a tax-free component as provided for in section 307-140 of the Income Tax Assessment Act 1997. This is the same component as the original taxable contribution prior to the split to the member’s spouse.

Eligible spouses

A spouse for purposes of the splitting rules is defined in section 10 of the SIS Act. A spouse is the person to whom the member is legally married, a person in a registered relationship with the member, or a person who, although not legally married to the member, lives with the member on a genuine domestic basis.

Any application must be for a spouse who is:

  • under their preservation age; or
  • has attained preservation age but is under age 65 and has not met the retirement condition of release.

This means that a member is only able to make an application for splitting if their spouse is older than their preservation age but under age 65 and has not retired. The definition of retirement depends on whether the spouse is between preservation age and 60 or between age 60 and 65.

In summary, any strategy for splitting a member’s contributions is a long term strategy, as the maximum amount that can be split to a member’s spouse is limited to a maximum of $21,250 (85% of $25,000 for those under age 60) or $29,750 (85% of $35,000 for those who are 60 and older).  The splitting strategy may help even out the superannuation balances of the member and his or her spouse. It can be used to allow an older spouse to gain tax benefits once they reach age 60 and meet a condition of release. In the case of a younger spouse, splitting can allow members to meet income test and social security asset requirements.


Graeme Colley is the Director, Technical & Professional Standards at SPAA, the SMSF Professionals’ Association of Australia.



SMSFs and infrastructure is marriage made in heaven


Most viewed in recent weeks

Is it better to rent or own a home under the age pension?

With 62% of Australians aged 65 and over relying at least partially on the age pension, are they better off owning their home or renting? There is an extra pension asset allowance for those not owning a home.

Too many retirees miss out on this valuable super fund benefit

With 700 Australians retiring every day, retirement income solutions are more important than ever. Why do millions of retirees eligible for a more tax-efficient pension account hold money in accumulation?

Is the fossil fuel narrative simply too convenient?

A fund manager argues it is immoral to deny poor countries access to relatively cheap energy from fossil fuels. Wealthy countries must recognise the transition is a multi-decade challenge and continue to invest.

Reece Birtles on selecting stocks for income in retirement

Equity investing comes with volatility that makes many retirees uncomfortable. A focus on income which is less volatile than share prices, and quality companies delivering robust earnings, offers more reassurance.

Comparing generations and the nine dimensions of our well-being

Using the nine dimensions of well-being used by the OECD, and dividing Australians into Baby Boomers, Generation Xers or Millennials, it is surprisingly easy to identify the winners and losers for most dimensions.

Anton in 2006 v 2022, it's deja vu (all over again)

What was bothering markets in 2006? Try the end of cheap money, bond yields rising, high energy prices and record high commodity prices feeding inflation. Who says these are 'unprecedented' times? It's 2006 v 2022.

Latest Updates


Superannuation: a 30+ year journey but now stop fiddling

Few people have been closer to superannuation policy over the years than Noel Whittaker, especially when he established his eponymous financial planning business. He takes us on a quick guided tour.

Survey: share your retirement experiences

All Baby Boomers are now over 55 and many are either in retirement or thinking about a transition from work. But what is retirement like? Is it the golden years or a drag? Do you have tips for making the most of it?


Time for value as ‘promise generators’ fail to deliver

A $28 billion global manager still sees far more potential in value than growth stocks, believes energy stocks are undervalued including an Australian company, and describes the need for resilience in investing.


Paul Keating's long-term plans for super and imputation

Paul Keating not only designed compulsory superannuation but in the 30 years since its introduction, he has maintained the rage. Here are highlights of three articles on SG's origins and two more recent interviews.

Fixed interest

On interest rates and credit, do you feel the need for speed?

Central bank support for credit and equity markets is reversing, which has led to wider spreads and higher rates. But what does that mean and is it time to jump at higher rates or do they have some way to go?

Investment strategies

Death notices for the 60/40 portfolio are premature

Pundits have once again declared the death of the 60% stock/40% bond portfolio amid sharp declines in both stock and bond prices. Based on history, balanced portfolios are apt to prove the naysayers wrong, again.

Exchange traded products

ETFs and the eight biggest worries in index investing

Both passive investing and ETFs have withstood criticism as their popularity has grown. They have been blamed for causing bubbles, distorting the market, and concentrating share ownership. Are any of these criticisms valid?



© 2022 Morningstar, Inc. All rights reserved.

The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. Any general advice or ‘regulated financial advice’ under New Zealand law has been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892) and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. For more information refer to our Financial Services Guide (AU) and Financial Advice Provider Disclosure Statement (NZ). You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.

Website Development by Master Publisher.