Super splitting grow your wealth together

BY WEALTH ADVISER

Introduction: Why Super Splitting Matters for Australian Families

When it comes to preparing for retirement, many Australians focus on growing their superannuation individually. But what if there was a way for couples to work together, sharing their super contributions to build a stronger financial future? This is where superannuation contribution splitting—commonly known as “super splitting”—comes into play.

Super splitting allows couples to transfer a portion of their super contributions from one partner to another, helping to balance retirement savings and maximise the benefits available to both. As highlighted in Firstlinks, “contribution splitting is a little-known but powerful strategy for couples to balance super and boost family wealth.” While not as widely discussed as other super strategies, super splitting can make a significant difference, particularly for households where one partner has a much higher super balance or where one has taken time out of the workforce.

In a world of shifting economic conditions and increasing longevity, building resilience into your retirement planning is more important than ever. Super splitting offers a practical way for families—especially in communities like St Ives, NSW, where many couples are planning for a comfortable retirement—to work together and make the most of the super system.

This article will guide you through the essentials of super splitting: how it works, who can benefit, practical steps to get started, and common pitfalls to avoid. Whether you’re just starting to think about retirement or looking to optimise your family’s wealth, understanding super splitting could be the key to growing your wealth together.

How Super Contribution Splitting Works

What Is Super Splitting?

Super contribution splitting is a strategy that allows you to transfer up to 85% of your concessional (before-tax) super contributions from your account to your spouse’s super account each financial year. This includes employer super guarantee payments, salary sacrifice contributions, and personal deductible contributions. As the Australian Taxation Office (ATO) explains, “You can split up to 85% of your concessional (before-tax) contributions with your spouse each year.”

This strategy is especially relevant for couples where one partner has a much higher super balance, or where one partner has spent time out of the workforce—perhaps due to caring responsibilities or part-time work. By splitting contributions, couples can ensure both partners have meaningful super balances, improving financial security and flexibility in retirement.

Who Can Use Super Splitting?

To use super splitting, you and your spouse must meet certain criteria:

• Marital Status: You must be married or in a de facto relationship (including same-sex couples).

• Age: The receiving spouse must be under their preservation age, or between preservation age and 65 and not yet retired.

• Type of Contributions: Only concessional contributions made in the previous financial year can be split.

As outlined in the Firstlinks article, “Contribution splitting is only available for concessional contributions, and you can only split contributions from the previous financial year unless you are rolling over or withdrawing your entire super balance.”

How Does the Process Work?

The process typically involves these steps:

1. Check Your Fund’s Rules: Not all super funds offer contribution splitting, so check with your fund first. Some funds may charge a fee for this service.

2. Make Concessional Contributions: These include employer contributions, salary sacrifice, and personal deductible contributions.

3. Submit a Splitting Application: Complete your fund’s contribution splitting application form, usually after the end of the financial year in which the contributions were made.

4. Timing: Applications must usually be made before the end of the following financial year, and before the receiving spouse turns 65 or retires.

5. Receive Confirmation: Your fund will process the request and transfer the nominated amount to your spouse’s super account.

As Passive Investing Australia notes, “You must lodge a Notice of Intent to claim a tax deduction on personal contributions before you can split them with your spouse.”

Common Misconceptions

It’s important to note that splitting contributions: Does not affect your concessional cap: The split is made after the contribution has been counted towards your cap.

Cannot be used for non-concessional (after-tax) contributions: Only before-tax contributions are eligible.

Does not remove excess contributions: If you exceed your concessional cap, splitting does not fix this.

The Firstlinks article clarifies, “Splitting does not remove excess contributions if you exceed your concessional cap.”

Benefits of Super Splitting: Real-Life Scenarios

Super splitting isn’t just a technical exercise—it can deliver real financial benefits for couples at all stages of life. Here are some of the main advantages, with examples and case studies drawn from leading Australian superannuation resources.

Balancing Super Between Partners

One of the most common reasons for super splitting is to even out super balances between partners. This is especially important where one partner has taken time out of the workforce, worked part-time, or earned less due to caring responsibilities.

As LegalSuper explains, “Contribution splitting can help couples where one partner has taken time out of the workforce, ensuring both have adequate retirement savings.” This can be a game-changer for many families, as it allows both partners to enjoy a more secure and comfortable retirement.

Example:

Sarah and David live in St Ives, NSW. David has worked full-time for most of his career, while Sarah took several years off to raise their children and later returned to work part-time. By splitting some of David’s concessional contributions into Sarah’s super, they can help balance their retirement savings, giving Sarah greater financial independence and flexibility in retirement.

Earlier Access to Tax-Free Super

Super splitting can also allow couples to access tax-free super earlier. If one partner is older and closer to preservation age, splitting contributions into their account can mean earlier access to tax-free income streams.

Firstlinks highlights, “If your spouse is older, splitting contributions to their account can bring forward your family’s access to tax-free super benefits.”

Example:

Michael is 60, and his wife, Anna, is 54. By splitting contributions into Michael’s super account, the couple can access tax-free super income sooner, helping them transition to retirement more smoothly.

Maximising Centrelink Age Pension Entitlements

Super splitting can also help couples maximise their Centrelink Age Pension entitlements. By shifting super into the younger partner’s account (which is not counted in the assets test until they reach Age Pension age), couples may be able to increase their Age Pension payments.

As LegalSuper notes, “Splitting contributions to the younger spouse can help reduce assessable assets for Centrelink purposes, potentially increasing Age Pension entitlements.”

Example:

Jenny is 67 and eligible for the Age Pension, while her husband, Tom, is 62. By splitting contributions into Tom’s super, the couple can reduce Jenny’s assessable assets, increasing her Age Pension payments until Tom reaches pension age.

Managing the $1.9 Million Total Super Balance Cap

The government’s Total Super Balance cap (currently $1.9 million) limits the amount you can transfer into a tax-free retirement income stream. By splitting contributions, couples can manage their balances to avoid breaching the cap.

As Firstlinks explains, “Contribution splitting can help couples manage their super balances to stay under the $1.9 million cap, maximising their ability to make non-concessional contributions and transfer funds into tax-free retirement accounts.”

Real-Life Impact: Building Family Wealth in St Ives and Beyond

For families in St Ives and similar communities, where property values and living standards are high, making the most of every dollar in super counts. According to the Association of Superannuation Funds of Australia (ASFA), the gap between men’s and women’s super balances at retirement remains significant, with women retiring with around 23% less super on average. Super splitting is a practical way to address this gap and ensure both partners are financially secure.

Practical Tips and Common Pitfalls

Super splitting is a powerful tool, but it’s important to get the details right. Here are some practical tips and common pitfalls to watch out for, drawn from the Firstlinks, HESTA, Passive Investing Australia, and ATO resources.

Step-by-Step Tips for Super Splitting

1. Check Your Fund’s Rules

• Not all super funds offer contribution splitting. Contact your fund or check their website to confirm.

• Some funds may charge a fee for processing the split.

2. Understand the Timing

• You can only split contributions made in the previous financial year, unless you are rolling over or withdrawing your entire balance.

• As HESTA advises, “You must apply to split contributions before your spouse turns 65 or retires.”

3. Complete the Paperwork

• Most funds require you to fill out a specific contribution splitting application form.

• If you are claiming a tax deduction for personal contributions, you must lodge a Notice of Intent before splitting.

4. Keep Good Records

• Keep copies of all forms and correspondence with your fund.

• Confirm the split has been processed and the funds have been transferred to your spouse’s account.

5. Review Regularly

• Super splitting is not a one-off exercise. Review your situation each year to see if further splitting is beneficial.

Common Pitfalls to Avoid

• Missing the Deadline: If you miss the application window, you cannot split contributions for that year.

• Not Checking Fund Rules: Some funds do not allow splitting, or may have additional requirements.

• Assuming All Contributions Are Eligible: Only concessional contributions can be split; non-concessional (after-tax) contributions are not eligible.

• Ignoring Tax Implications: While splitting does not affect your concessional cap, it is important to consider the overall tax impact, especially if you are close to the cap.

As Passive Investing Australia cautions, “If you exceed your concessional cap, splitting does not remove the excess contributions or the associated tax liability.”

Where to Get Help

• ATO Website: The official source for rules and eligibility (ATO: Contributions splitting).

• MoneySmart: Independent financial guidance (MoneySmart: Super contribution splitting).

• Your Super Fund: Most funds have resources and forms available online.

• Financial Adviser: For tailored advice, especially if your situation is complex.

Conclusion: Making Super Splitting Work for You

Super splitting is a practical, underused strategy that can help Australian couples grow their wealth together. By understanding how it works, who can benefit, and the steps involved, you can take control of your family’s financial future and make the most of the super system.

As Firstlinks puts it, “With the right strategy, couples can make the most of their super and secure a stronger financial future together.” Whether your goal is to balance super between partners, access tax-free income sooner, maximise Centrelink entitlements, or simply build greater financial resilience, super splitting offers a flexible and effective solution.

Next Steps: Your Super Splitting Checklist

• Check if your super fund allows contribution splitting.

• Confirm your and your spouse’s eligibility.

• Calculate how much you can split (up to 85% of concessional contributions).

• Complete and submit the necessary forms before the deadline.

• Review your super strategy each year to see if further splitting is beneficial.

• Seek professional advice if you have complex needs or want to maximise your outcomes.

For more information, visit the ATO’s contribution splitting page or speak to your financial adviser.

By taking a proactive approach and working together, you and your partner can build a more secure and prosperous retirement—one contribution at a time.

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References

• “Super contribution splitting,” Firstlinks, Graham Hand, 2024. https://www.firstlinks.com.au/super-contribution-splitting

• “Meg on SMSFs – Is contribution splitting a forgotten strategy?” Firstlinks, Meg Heffron, 2023. https://www.firstlinks.com.au/meg-on-smsfs-is-contribution-splittinga-forgotten-strategy

• “Contribution Splitting,” Passive Investing Australia, 2024. https://passiveinvestingaustralia.com/contribution-splitting

• “Boost Your Super Together – Guide to Contribution Splitting,” LegalSuper, 2023. https://www.legalsuper.com.au/tools-and-resources/news/boost-yoursuper-together-guide-to-contribution-splitting

• “Superannuation Contribution Splitting,” HESTA, 2024. https://www.hesta.com.au/your-super/super-contribution-splitting

• “Contributions splitting,” Australian Taxation Office (ATO), 2024. https://www.ato.gov.au/individuals/super/growing-your-super/contribution-splitting/

• “Super contribution splitting,” MoneySmart, Australian Securities & Investments Commission, 2024. https://moneysmart.gov.au/how-super-works/super-contributionsplitting

• “Superannuation balances by age and gender,” Association of Superannuation Funds of Australia (ASFA), 2023. https://www.superannuation.asn.au/resources/superannuationstatistics/superannuation-account-balances

• “Retirement income and the Age Pension,” Services Australia, 2024. https://www.servicesaustralia.gov.au/age-pension