Retirement Planning, Superannuation

Contribution Splitting Explained

Contribution splitting allows individuals to transfer up to 85% of their concessional (before-tax) super contributions to their spouse’s super account. While often overlooked, this strategy can be a powerful tool in managing tax outcomes, improving retirement access, and navigating limits like the Transfer Balance Cap (TBC) and Total Super Balance (TSB) thresholds.

How it works

You may be eligible to split concessional contributions made in the previous financial year—including employer super guarantee (SG), salary sacrifice, and personal deductible contributions—into your spouse’s superannuation account.

To qualify, the receiving spouse must:

  • Be under their preservation age which, if you were born after 1 July 1964, is 60; or
  • Be between preservation age and age 65 and not yet retired.

In simple terms, your spouse must be ineligible to access their super on retirement grounds at the time of the split.

Contribution splitting is only available if your super fund supports it, and applications are typically submitted in the financial year following when the contributions were made—unless you’re withdrawing or rolling over your entire super balance earlier, in which case the application must be lodged beforehand.

The amount of contribution split counts toward your own concessional contributions cap, not your spouse’s, and is not taxed again when transferred to your spouse’s fund. Importantly, the contribution does not impact your spouse’s concessional or non-concessional contribution caps.

When contribution splitting may benefit you

Contribution splitting can provide real strategic value when used for the right reasons. The following scenarios can unlock meaningful advantages:

  • One spouse is older and likely to retire earlier: Shifting contributions to the older partner’s super can allow the household to access retirement savings sooner.
  • Managing Transfer Balance Cap (TBC) limits: Keeping both partners’ balances under the $1.9 million cap (2024–25) ensures more funds can enter the tax-free pension phase.
  • Preserving eligibility for carry-forward concessional contributions: Maintaining a Total Super Balance (TSB) under $500,000 allows you to use unused concessional caps from the previous five years.
  • Accessing the bring-forward rule for non-concessional contributions: Keeping your TSB under the TBC ensures eligibility to utilise the all, or a portion, of the bring-forward rule.
  • Improving Age Pension eligibility: Super held in accumulation phase by a younger spouse is not counted under the income or assets test for Age Pension purposes until they reach Age Pension age. Transferring funds into the younger spouse’s name can boost entitlements.

Key considerations

Before implementing a contribution split, there are several things you should consider. This includes:

  • Fund availability: Not all super funds support contribution splitting. Always confirm with your fund.
  • Eligible contributions only: Only concessional (before-tax) contributions are eligible. This includes SG, salary sacrifice, and deductible personal contributions. Non-concessional contributions cannot be split.
  • Contribution limits: You can split up to 85% of the previous year’s concessional contributions. This is because 15% is deducted as contributions tax when the funds are received.
  • Timing: Applications must be lodged by the end of the financial year after the contributions were made. If you’re rolling over or withdrawing your full balance sooner, the application must be submitted before that transaction.
  • Spouse eligibility: The receiving spouse must be under preservation age or between preservation age and age 65 and not yet retired.
  • ATO oversight: Contribution splitting is governed by rules set out by the Australian Taxation Office. For the latest updates, visit ato.gov.au.

Guided Investor approach

At Guided Investor, we apply contribution splitting as part of Phase 2 and up of the wealth creation process — when clients are in their peak accumulation years and looking to improve the long-term efficiency of their retirement.

We combine this strategy with others like spouse contributions, government co-contributions, and concessional contribution strategies to support super balance equalisation and enhance tax efficiency across the household.

Used effectively, contribution splitting can add flexibility and resilience to your overall retirement strategy.

Disclaimer

The information in this website is for general information only.

It should not be taken as constituting professional advice from the website owner – Guided Investor as Authorised Representative of Symmetry Group (AFSL 426385)

You should consider seeking independent legal, financial, taxation or other advice to check how the information relates to your unique circumstances.

Guided Investor is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by use of this document.

Brad Buters Financial Planner Perth

Brad Buters

Managing Director | Financial Adviser

Helping Australians achieve financial independence.

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