Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 322

All’s fair in love and super: why couples should equalise super

It is common for couples to have very different super balances. If one partner has taken time out to care for children, undertake casual work, or work part-time, the disparity can be pronounced. Super balances will also vary depending on the individual’s age and salary.

But changes implemented by super reforms since 1 July 2017 have brought greater incentives for spouses to consider equalising their superannuation balances, including tax and estate planning benefits.

Some of the major changes

The transfer balance cap limits the total amount of superannuation that can be transferred from the accumulation phase to the tax-free retirement phase.

This cap starts at $1.6 million per individual. Any excess transfer balance amount must be removed from the retirement phase and will be subject to tax. Equalising super between spouses can therefore maximise the amount that can be invested in the tax-free retirement phase and the amount that can be kept in the tax-friendly super environment if one spouse were to die.

In addition, from July 2018, individuals with a total super balance less than $500,000 are allowed to carry forward unused concessional contributions (ie pre-tax super contributions) and ‘catch them up’ in later years.

This rule also creates an argument for equalising super between spouses, so both can potentially use the catch-up concessional contribution measure to maximize their retirement savings.

How to equalise super between spouses

A number of strategies can be used to equalise super balances between spouses, including regular spouse contributions, contributions splitting and recontribution strategy.

If a member’s income is below $37,000, their spouse may receive a tax offset of up to $540 if they make a spouse contribution of up to $3,000 to their spouse’s super each year. If the receiving spouse’s income exceeds $37,000, the amount of the tax offset available starts phasing out and cuts out completely at $40,000.

Couples can also consider contributions splitting, which allows one member of a couple to roll over up to 85% of their concessional contributions made in a year to their spouse.

Another option for couples who have reached age 60 is a recontribution strategy. This involves withdrawing some super benefits from the account of the spouse with a higher balance, by starting a transition to retirement income stream or making a lump sum withdrawal (if a condition of release is met) and recontributing to the spouse’s super account.

These withdrawn funds can then be contributed to the spouse’s account either via a spouse contribution or a personal contribution (ie the spouse making a member contribution for themselves).

Either way, the contribution counts towards the receiving spouse’s non-concessional contribution cap, which is $100,000 per year, or if the receiving spouse is under 65, the bring-forward cap of up to $300,000 may be available.

These strategies can be a useful way for couples to maximise the amount that can be held tax-free at retirement, which is $3.2 million in total. For members in the accumulation phase with a total super balance of less than $500,000, they can also help both members of a couple qualify to make catch-up concessional contributions to maximise their super savings in the lead to retirement.

The recontribution strategy can also be useful for estate planning purposes, as it potentially reduces the tax payable from death benefit proceeds. It may boost an older spouse’s amount of age pension if the older spouse is the person with the higher balance where the younger spouse is under their qualifying age pension age and their super accumulation accounts are not assessed for social security purposes.

Other considerations

The new catch-up rule for concessional contributions will also increase the flexibility of salary sacrifice arrangements.

For example, if Anne receives $5,000 in employer superannuation contributions and does not make any additional pre-tax contributions, she will have $20,000 of unused concessional contributions left in the 2018-19 tax year. This can then be carried forward for up to five years.

For Australians who have been funneling income into other areas, like a mortgage, kids’ education, or paying off personal debt, this new rule provides a welcome way to add more to super when they can afford to.

If both partners have low super balances, for example if both are self-employed, low income earners or recent immigrants to Australia, there may be no need to split contributions. But there are still strategies available to help with maximising super.

Those with income below $38,564 may consider taking advantage of the government co-contribution of up to $500 by making an after-tax member contribution of $1,000 if eligible. The cut-off threshold is $53,564. To qualify, the member must be under 71 and have personal exertion income (such as a salary) of over 10% of their total income.

The increase in the spouse income threshold from $10,800 to $37,000 for spouse contribution tax offset purposes also provides greater incentive for partners to make super contributions on behalf of a low-income spouse. The contributing spouse can potentially claim a tax offset up to $540 per year by making super contributions on behalf of a low-income partner.

Concluding observations

Members of a couple equalising their super balances can bring tax benefits, help with estate planning and boost the retirement nest egg of a partner with minimal retirement savings.

While couples may be concerned about the impact of equalising super in the event of divorce, as super is considered a divisible asset under Australian Family Law, there should be little impact.

There are, however, other risks to consider, such as ensuring no caps are breached and that members meet the conditions required for each strategy.

Given the number of potential strategies on offer and the complexity of some of these, we recommend that anyone who is considering ways to boost their super should seek financial advice.


Craig Day is an Executive Manager at Colonial First State. This article is for general information only and readers should seek professional advice on their personal circumstances before taking action.



How SMSF contribution reserving can use the higher caps

How the super contribution changes may benefit you

Five things SMSF trustees should consider right now


Most viewed in recent weeks

Lessons when a fund manager of the year is down 25%

Every successful fund manager suffers periods of underperformance, and investors who jump from fund to fund chasing results are likely to do badly. Selecting a manager is a long-term decision but what else?

2022 election survey results: disillusion and disappointment

In almost 1,000 responses, our readers differ in voting intentions versus polling of the general population, but they have little doubt who will win and there is widespread disappointment with our politics.

Now you can earn 5% on bonds but stay with quality

Conservative investors who want the greater capital security of bonds can now lock in 5% but they should stay at the higher end of credit quality. Rises in rates and defaults mean it's not as easy as it looks.

30 ETFs in one ecosystem but is there a favourite?

In the last decade, ETFs have become a mainstay of many portfolios, with broad market access to most asset types, as well as a wide array of sectors and themes. Is there a favourite of a CEO who oversees 30 funds?

Welcome to Firstlinks Election Edition 458

At around 10.30pm on Saturday night, Scott Morrison called Anthony Albanese to concede defeat in the 2022 election. As voting continued the next day, it became likely that Labor would reach the magic number of 76 seats to form a majority government.   

  • 19 May 2022

Betting markets as election predictors

Believe it or not, betting agencies are in the business of making money, not predicting outcomes. Is there anything we can learn from the current odds on the election results?

Latest Updates


'It’s your money' schemes transfer super from young to old

With the Coalition losing the 2022 election, its policy to allow young people to access super goes back on the shelf. But lowering the downsizer age to 55 was supported by Labor. Check the merits of both policies.

Investment strategies

Rising recession risk and what it means for your portfolio

In this environment, safe-haven assets like Government bonds act as a diversifier given the uncorrelated nature to equities during periods of risk-off, while offering a yield above term deposit rates.

Investment strategies

‘Multidiscipline’: the secret of Bezos' and Buffett’s wild success

A key attribute of great investors is the ability to abstract away the specifics of a particular domain, leaving only the important underlying principles upon which great investments can be made.


Keep mandatory super pension drawdowns halved

The Transfer Balance Cap limits the tax concessions available in super pension funds, removing the need for large, compulsory drawdowns. Plus there are no requirements to draw money out of an accumulation fund.


Confession season is upon us: What’s next for equity markets

Companies tend to pre-position weak results ahead of 30 June, leading to earnings downgrades. The next two months will be critical for investors as a shift from ‘great expectations’ to ‘clear explanations’ gets underway.


Australia, the Lucky Country again?

We may have been extremely unlucky with the unforgiving weather plaguing the East Coast of Australia this year. However, on the economic front we are by many measures in a strong position relative to the rest of the world.

Exchange traded products

LIC discounts widening with the market sell-off

Discounts on LICs and LITs vary with market conditions, and many prominent managers have seen the value of their assets fall as well as discount widen. There may be opportunities for gains if discounts narrow.



© 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.