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

10 reasons wealthy homeowners shouldn't receive welfare

The RBA Governor says rising house prices are due to "the design of our taxation and social security systems". The OECD says "the prolonged boom in house prices has inflated the wealth of many pensioners without impacting their pension eligibility." What's your view?

House prices surge but falls are common and coming

We tend to forget that house prices often fall. Direct lending controls are more effective than rate rises because macroprudential limits affect the volume of money for housing leaving business rates untouched.

Survey responses on pension eligibility for wealthy homeowners

The survey drew a fantastic 2,000 responses with over 1,000 comments and polar opposite views on what is good policy. Do most people believe the home should be in the age pension asset test, and what do they say?

100 Aussies: five charts on who earns, pays and owns

Any policy decision needs to recognise who is affected by a change. It pays to check the data on who pays taxes, who owns assets and who earns the income to ensure an equitable and efficient outcome.

Three good comments from the pension asset test article

With articles on the pensions assets test read about 40,000 times, 3,500 survey responses and thousands of comments, there was a lot of great reader participation. A few comments added extra insights.

The sorry saga of housing affordability and ownership

It is hard to think of any area of widespread public concern where the same policies have been pursued for so long, in the face of such incontrovertible evidence that they have failed to achieve their objectives.

Latest Updates


$1 billion and counting: how consultants maximise fees

Despite cutbacks in public service staff, we are spending over a billion dollars a year with five consulting firms. There is little public scrutiny on the value for money. How do consultants decide what to charge?

Investment strategies

Two strong themes and companies that will benefit

There are reasons to believe inflation will stay under control, and although we may see a slowing in the global economy, two companies should benefit from the themes of 'Stable Compounders' and 'Structural Winners'.

Financial planning

Reducing the $5,300 upfront cost of financial advice

Many financial advisers have left the industry because it costs more to produce advice than is charged as an up-front fee. Advisers are valued by those who use them while the unadvised don’t see the need to pay.


Many people misunderstand what life expectancy means

Life expectancy numbers are often interpreted as the likely maximum age of a person but that is incorrect. Here are three reasons why the odds are in favor of people outliving life expectancy estimates.

Investment strategies

Slowing global trade not the threat investors fear

Investors ask whether global supply chains were stretched too far and too complex, and following COVID, is globalisation dead? New research suggests the impact on investment returns will not be as great as feared.

Investment strategies

Wealth doesn’t equal wisdom for 'sophisticated' investors

'Sophisticated' investors can be offered securities without the usual disclosure requirements given to everyday investors, but far more people now qualify than was ever intended. Many are far from sophisticated.

Investment strategies

Is the golden era for active fund managers ending?

Most active fund managers are the beneficiaries of a confluence of favourable events. As future strong returns look challenging, passive is rising and new investors do their own thing, a golden age may be closing.



© 2021 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.