Couples looking to maximise their joint savings may benefit from super contribution splitting depending on their circumstances and goals.
Super contribution splitting can be a suitable strategy when one member of a couple has a higher super balance than the other and/or is earning a higher salary and receiving a greater amount of employer super guarantee contributions.
There are different reasons why you might use it, your financial adviser will be best placed to advise you.
How does contribution splitting work?
Contribution splitting allows you to split your before-tax (concessional) contributions to super with your spouse, which includes married, de facto and registered relationships. These comprise, but are not limited to, employer super guarantee contributions, contributions made under a salary sacrifice arrangement and personal contributions by an eligible person which may be claimed as a tax deduction.
Not all contributions qualify, the following contributions can’t be split:
- after-tax (non-concessional) contributions
- rollovers
- super lump sums paid from a foreign super fund
- contributions to a defined benefit account.
The age of the member splitting the contribution is irrelevant, but your spouse must be under age 65. If they have reached preservation age at the time of the split, your spouse must declare they do not meet the retirement condition of release. Once received by the super fund, the contributions are preserved until your spouse meets a condition of release.
The maximum amount of contributions that can be split annually is the lesser of:
- 85% of before-tax contributions, and
- the before-tax (concessional) contributions cap, including any unused concessional contribution cap from the last five years (if eligible).
Contribution splitting doesn’t reduce the amount of concessional contributions which count towards your concessional contributions cap in a financial year and won’t get rid of an excess contribution. Importantly, while the contributions are transferred to your spouse’s super, they still count towards your cap.
Always check with your fund, not all super funds offer contribution splitting and some funds charge a fee.
What are the benefits of splitting?
Couples may use super contribution splitting for different reasons.
- You can use it as a strategy to keep your spouse’s super below $500,000. This could allow them to take advantage of their unused concessional contribution cap from the past five years to make a higher pre-tax contribution.
- You can use spouse contribution splitting to even out account balances (as far as practicable). With the transfer balance cap placing a limit on the amount of super you can move into a tax-free retirement income stream, splitting contributions from a spouse with a higher balance, particularly if it is done over several years, can assist with both parties maximising their transfer balance cap. This could also be beneficial if the proposed Division 296 tax (additional 15% tax on super balances over $3 million) or a similar concept is legislated, placing an additional tax on high balance super accounts.
Example
Stanley, age 54, has $1.3 million in super. He earns $250,000 pa, plus super guarantee. His spouse Evie, age 54, has $500,000 in super, and earns $70,000 pa, plus super guarantee.
Over the course of the next 10 years, Stanley splits the maximum concessional contribution to Evie. At age 64, assuming no other contributions, and a net earning rate of 5.28%, their super balances are projected to be $2,000,000 for Stanley and $1,235,000 for Evie. This allows them to retire and each transfer their respective super balances into tax-free pensions (based on current legislation).
- When one member of the couple is older, the younger spouse could split their super contributions to the older spouse, who may be able to access their benefit at an earlier date.
- There may also be advantages in splitting contributions with a spouse who is younger. For example, it may temporarily reduce the value of your combined assets under the social security means test and could result in greater Centrelink or DVA pension entitlements.
- For a lower income or non-working spouse, contribution splitting can help ensure they have sufficient funds to pay premiums for Life and Total and Permanent Disability Insurance cover they hold in their super fund.
How do you elect to split and when does it apply?
The superannuation contribution splitting process is retrospective and usually you can only elect to split contributions made during a financial year once that same financial year has ended and within the next 12 months. However, if your entire benefit is to be rolled over, transferred or cashed out, you can request that your contributions be split during the financial year in which they are made.
Importantly, if you intend on claiming a tax deduction for any personal deductible contributions that you want to split, you must lodge the notice of your intention to claim a tax deduction before requesting that the contributions be split.
Example
Lachie is 67 and retired in March 2025. In addition to his employer super guarantee contributions of $15,000, he made a non-concessional contribution of $15,000 in December 2024, on which he intends to claim a deduction. He would like to split the maximum contributions he can to his wife Bree, age 60, and roll his super into an account-based pension to generate a tax-free retirement income stream as soon as possible.
The timing of Lachie’s strategies is important as follows:
- Lodge a 'Notice of intent to claim or vary a deduction for personal super contributions' on the $15,000 personal contribution, and receive acknowledgement from the super fund.
- Next, complete a 'Superannuation contributions splitting application' to request the maximum contributions of $25,500 ($30,000 x 85%) made in the 2024-25 financial year be split to Bree. This can be done in the same financial year, as his entre balance is to be rolled over. Bree works part-time and is able to declare she is not permanently retired.
- Having completed both these steps, Lachie can now rollover his super to a retirement income stream.
If Lachie applies for the Age Pension, the contributions split to Bree will not be assessable under the assets or income test whilst maintained in her accumulation account and may increase his potential benefit.
Get the right advice
Contribution splitting can be valuable under the right circumstances, it’s not a ‘one size fits all’ strategy and its appropriateness will depend on the couple’s personal circumstances and goals. Knowing the rules and benefits can help you decide whether its right for you. What works for one couple may not work for another, and as everyone’s circumstances are different talk to a financial adviser about your options.
Brooke Logan is a technical and strategy lead in UniSuper's advice team. UniSuper is a sponsor of Firstlinks. Please note that past performance isn’t an indicator of future performance. The information in this article is of a general nature and may include general advice. It doesn’t take into account your personal financial situation, needs or objectives. Before making any investment decision, you should consider your circumstances, the PDS and TMD relevant to you, and whether to consult a qualified financial adviser.
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