STRATEGY STRATEGY
Evening up the score
Contribution splitting is a strategy allowing spouses to even up a disparity in their superannuation balances. Tim Miller details the key requirements needed to implement this course of action.
TIM MILLER is technical and education manager at Smarter SMSF.
Introduced all the way back in 2006, contribution splitting is a strategy that allows a member of a superannuation fund, including SMSFs, with an accumulation interest to split certain contributions with their spouse. It is a highly useful strategy not only to help in the management of a member’s total super balance (TSB), but also to assist with spousal balance discrepancies prior to a time that members can actively engage in recontribution strategies, like when they reach preservation age or retire. This article will not only look at all of the necessary conditions that must be met for a splitting application to be valid, but also at how contribution splitting can be used with other strategies members might use to channel money into super and how it can impact others.
Who can split? Contribution splitting is only possible between spouses and in this regard spouse takes on its usual
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meaning, that is, inclusive of both legally married individuals and also de facto couples. This means the relationship must be current. It should be noted contribution splitting should not be confused with superannuation splitting, which is the term often associated with relationship breakdowns and payment splits. The receiving spouse must be under age 65 and if they have reached preservation age, they must not have met a condition of release, with a nil cashing restriction, such as retirement.
What contributions can you split? Only concessional contributions can be split and these are referred to as splittable contributions. The rules differentiate between taxed splittable contributions and untaxed splittable contributions. For the purposes of splitting, SMSF members will only Continued on next page
