Business · Markets · 2 hrs ago
Couples can split super contributions to manage tax and pension eligibility
In Australia, couples can transfer up to 85% of one partner’s super contributions from the previous financial year into the other partner’s account.
The option applies to spouses, including de facto partners, and can be used each year until the receiving partner turns 65, with a work test applying from 60 to 65.
The strategy can help balance couples’ super savings and may reduce tax in some cases.
It may also help couples make better use of tax-free pension accounts and preserve eligibility for catch-up contributions.
For couples seeking the Age Pension, moving super to a younger partner may reduce assets counted in Centrelink’s assessment because super in the accumulation phase is exempt from its assets and income tests.
Recent tax changes affecting larger super balances and higher Centrelink deeming rates have made ownership of super more important.
Couples can review their contributions and consider splitting them each year, subject to the rules and their circumstances.
Couples can transfer up to 85% of one partner’s previous financial year super contributions to the other partner’s account.
Financial planners say the strategy is underused, partly because many people do not know it is available.
Splitting contributions can help couples manage tax, pension eligibility and differences between their super balances.
The rules allow annual splitting until the receiving spouse reaches 65, with a work test applying between ages 60 and 65.
- Who
- Couples, including de facto partners, and their financial advisers.
- What
- Couples can transfer up to 85% of a partner’s previous financial year super contributions to the other partner’s account.
- When
- The transfer can be made each year until the receiving spouse reaches 65; a work test applies between 60 and 65.
- Where
- Australia.
- Why
- Splitting can help couples manage super balances, reduce potential tax and improve eligibility for an Age Pension.
This story does not have two clearly opposing sides.
Centrelink deeming rates began rising, increasing by 1.5 percentage points since then.
A new 15% tax on super balances above $3 million was introduced, according to the article.
- Maximum contribution split
- 85% of previous financial year super contributions
- Receiving spouse age limit
- 65
- Work test age range
- 60 to 65
- Account-based pension limit
- $2.1 million per retired couple member
- Catch-up contribution balance threshold
- Below $500,000
What people are saying
Most people simply don’t know it exists
It’s no longer just about how much super a couple has, but who holds it.
Splitting steadily through your 30s and 40s means no dramatic rescue missions in your 50s and 60s, and you’re not at the mercy of contribution caps.
Sources
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