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Contribution splitting - transferring recent contributions

Section: 11.2

Super contribution splitting allows your clients to transfer concessional contributions made during the year to their spouse's super account, either in the same or another fund.

The split will generate a 'contributions-splitting super benefit' which is a 100% taxable component when it is withdrawn from the originating spouse's account. The amount is fully preserved in the receiving spouse's account.

Spouse contribution splitting is not compulsory, with each fund deciding if and when to offer splitting. It is important to check with each fund to determine whether your clients will be able to use spouse contribution splitting.

What can be split?

Only splittable contributions up to the maximum amount may be split under this measure. Splitting laws only apply to accumulation accounts and defined benefit interests that are not part of a defined benefit component.

Splittable contributions

Splittable contributions, subject to the exclusions below, are:

  • contributions to a regulated super fund on or after 1 January 2006, or
  • allocated surplus contribution amounts that are allocated on or after 1 January 2006.

Note: Splittable contributions do not include:

  • Non-deductible contributions made between 5 April 2007 and 30 June 2007.
  • Amounts that would form part of the contributions segment (part of the tax-free component) of the super interest, eg non-concessional contributions.
  • Rollover super benefits.
  • Amounts that have previously been split.
  • Super lump sums paid from a foreign super fund.
  • Directed termination payments (DTPs).
  • Contributions by the Commonwealth, a State or a Territory to a public sector super scheme in relation to a benefit that accrued in a financial year that commenced before 1 July 2005 are not splittable contributions.

There are three types of splittable contributions:

  • Taxed splittable contributions are contributions that are included in the assessable income of a super fund and allocated surplus contribution amounts, eg super guarantee and salary sacrifice contributions.
  • Untaxed splittable contributions are contributions made by a fund member or by another person to a regulated super fund on or before 5 April 2007 that are not included in the assessable income of the fund, eg personal undeducted contributions or spouse contributions made on or before 5 April 2007.
  • Untaxed splittable employer contributions are contributions made by the Commonwealth, a State or a Territory to a public sector super scheme that are not included in the assessable income of the fund.

Contribution Caps

A contributions splitting super benefit only counts towards the originating spouse's concessional cap. It does not count towards any cap when it is split across to the receiving spouse.

What can't be split?

Splitting laws also do not apply to accounts that are subject to payment splits or payment flags under a marriage breakdown.

Maximum splittable amounts

The maximum amount of contributions made in a particular financial year that can be split depends upon the type of splittable contribution.

Type of splittable contribution Maximum splittable amount
Taxed splittable contributions
e.g. salary sacrifice and SG contributions
The lesser of:
  • 85% of the concessional contributions for that financial year, and
  • The concessional contributions cap for that financial year
Untaxed splittable contributions
e.g. personal undeducted contributions made on or before 5 April 2007
100% of the amount of the untaxed splittable contributions made in the financial year
Untaxed splittable employer contributions e.g. contributions by the Commonwealth, a State or a Territory 100% of the concessional contributions cap for that financial year

Applying to split contributions
A member must apply to their fund to split contributions, specifying the amount and type of contributions to be split, along with their spouse's personal and super account details. The member's spouse must be aged under preservation age at the time of the split request.

If the member's spouse has reached preservation age and is under age 65, they must declare that they do not satisfy the 'retirement' condition of release at the time the split request is made. Contributions splitting cannot be made to a member's spouse age 65 or over.

When can contributions be split?

Contributions can generally be split after the conclusion of the financial year in which the contribution is made and only in that financial year. This means that contributions made between 1 July 2016 and 30 June 2017 can be split from 1 July 2017 until 30 June 2018. However, if the client intends to roll over their entire super balance before the end of the financial year, they can also apply to split their contributions within that same financial year so that the split occurs prior to the rollover.

A further timing issue arises for clients wishing to claim a personal tax deduction for their contributions. These clients must lodge their valid notice (see section 4.3) with the fund before they apply to split. This ensures that the correct taxation status of the contributions is determined prior to the split.

Last modified: Thursday, January 11, 2018