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Building Wealth as a Team: How Spouse Splitting Can Boost Your Retirement
 
 
   

Building Wealth as a Team: How Spouse Splitting Can Boost Your Retirement?

News | Mehak Gaba | Released: 23/04/2025 | Read: 5 Mins
   
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Contribution splitting is a super strategy that lets you transfer a portion of your concessional (before-tax) contributions like employer or salary sacrifice contributions into your spouse’s super account. It’s a smart way to grow your retirement savings together and take a team approach to planning for the future.

 

This strategy can be particularly beneficial if your spouse:

  • Works part-time.
  • Has taken a break from work for parenting or caregiving.
  • Earns a lower income

By splitting contributions, couples can better balance their superannuation savings especially when one partner is accumulating super more quickly than the other.

 

While it's an effective strategy for long-term retirement planning, however it's important to ensure eligibility, understand who qualifies as a spouse under super rules, stick to the relevant timing requirements, and submit the correct ATO forms to get it right.
   

Who is considered your spouse?

   

For superannuation purposes, your spouse can be:

  • Someone you are legally married to.
  • A person in a registered domestic relationship under applicable state or territory laws (including registered same-sex relationships)
  • A partner of the same or opposite sex who lives with you on a genuine domestic basis as a couple (commonly referred to as a de facto partner)
   

When Spouse Contribution Splitting Helps?
   

Spouse contribution splitting doesn’t increase the total amount of super, but it redistributes it between you and your partner, which can provide long-term benefits:

 

1. Boosting Your Spouse’s Super Balance: Splitting helps boost your spouse retirement savings without requiring him/her to contribute personally.
 
2. Helps Maximise Tax-Free Super Withdrawals Later: At retirement, you can usually withdraw your super tax-free from age 60 (if it's in pension phase). If only one partner has a big super balance, it might push them over the transfer balance cap (currently $1.9 million), which limits how much can be moved into the tax-free pension phase. Spreading the super between both partners means:
  • More money in tax-free pension phase.
  • Less exposure to extra tax or restrictions.
3. Early Access Planning: If your spouse is older than you,          and he/she and meets a condition of release (e.g. retired or age 65), and this could allow:
  • Earlier access to super via your spouse’s account
  • More flexibility in retirement income planning.
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When can you Spilt contributions?  
   

You can apply to split contributions:

  • After the end of the financial year in which the contributions were made, and
  • Anytime up to the end of the following financial year.
   

Situation:

  • Emma is a member of a SMSF and received $24,000 in concessional contributions (including employer SG and salary sacrifice) during the 2023–24 financial year.
  • Emma wants to split part of these contributions with her spouse, Daniel, who works part-time and has a smaller super balance.
  • Timing for Contribution Split: Emma cannot apply immediately. She must wait until after 30 June 2024. From 1 July 2024, Emma can submit the splitting arrangement anytime until 30 June 2025.
  • Action Required: To complete the process, Emma must lodge the Superannuation Contributions Splitting Application (ATO Form NAT 15237) with the SMSF trustee.
   

Conditions to be met when splitting contributions with your spouse

   
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1. Legal Eligibility: Under SIS Regulation 6.44(2)(c), you may split concessional contributions with your          spouse only if:

  •     Your spouse is under their preservation age, or
  •     Your spouse is between preservation age and 65 years old, and not retired.
    Additionally, the receiving spouse must provide a signed statement to the trustee confirming that            they meet the required eligibility conditions. Interestingly, there are no rules about the age and retirement      status for the contributing spouse. However, age and retirement status of the receiving spouse matters.
   

Situation (a): Eligible Spouse Under Preservation Age

  • Liam (45) wants to split part of his concessional contributions from 2023–24 with his spouse, Zoe (44). Zoe works part-time and is well under her preservation age. She signs a declaration confirming she’s under her preservation age and not retired.
  • Outcome: Zoe is eligible for a contribution split.

Situation (b): Spouse Turned 65 Before Split Application

  • Emma made concessional contributions during the 2022–23 financial year and intended to split a portion of them with her spouse, Peter. At the time the contributions were made, Peter was 64—meeting the age criteria for receiving a split. However, by the time Emma submitted the contribution splitting application (after 30 June 2023), Peter had already turned 65 (in August 2023).
  • Outcome: Although Peter was eligible at the time the contributions were made, he was not eligible at the time of the application. Under the superannuation rules, a receiving spouse must be under age 65 or between preservation age and 65 and not retired at the time the split application is lodged. Since Peter had already turned 65 when the application was submitted, he no longer met the eligibility criteria.

    👉 Key Takeaway:
    Eligibility is determined at the time of the application, not when the contributions were made.     Timing matters if your spouse is nearing age 65, it's important to act promptly after the financial year ends to avoid missing the opportunity to split contributions.

Situation (c): Never Worked – Ineligible to be "Retired"

  • Paul wants to split contributions with his spouse, Sarah (62), who has never worked. She is not employed and considers herself "retired."
  • Outcome: Sarah does not meet the superannuation definition of retirement and cannot satisfy eligibility under SIS Reg 6.44(2)(c). She is ineligible to receive a contribution split.
   

2. Fund Eligibility: Your super fund must allow contributions splitting. For SMSFs, you must check trust            deed to confirm that contribution splitting is permitted.

 

3. Trustee Responsibilities: Trustees (you and/or your spouse) must:  

  •   Maintain accurate records.
  •   Ensure proper reporting of all contribution splitting activity.
  •   Confirm the spouse’s eligibility before processing the split.

4.  Contribution Limit: You can split up to 85% of your concessional contributions. These include:
  •    Employer Super Guarantee (SG) contributions.
  •    Salary sacrifice contributions.
  •    Personal deductible contributions (after submitting a valid notice of intent to claim a deduction).
   

 

Situation (a): John's Contribution Split

  • Zac's employer contributed $10,000 to his super fund in the 2023–24 financial year. He applies to split $7,000 with his wife, Mary, who works part-time.
  • Outcome:  Zac's super fund approves the application as $7,000 is less than 85% of $10,000 and within his concessional contributions cap. $7,000 is transferred to Mary’s super fund.
Situation (b): Sofia's Excess Contributions

 

  • Sofia made $35,000 in concessional contributions (includes employer contribution as $15,000 and salary sacrifice contribution as $20,000) for the 2023–24 financial year. She consults with an adviser who recommends reducing her salary sacrifice to $12,500 and advised her she would need to pay excess contributions because she had contributed more than the $27,500 concessional contributions cap for 2023–24.
  • Later, a friend told Sofia about contributions splitting. Sofia and her friend thought that splitting her contributions with her spouse - John might eliminate the excess contributions made in 2023–2024.

  • Hence, Sofia submits a Superannuation contributions splitting application, requesting to split $29,750 (85% of $35,000).

  • Her fund rejects this, as it exceeds the $27,500 concessional cap, and approved a reduced split of $27,300 (78% of $35,000), keeping it within the allowable cap.

  •  

    Outcome: The contribution split is processed, but Sofia incurs excess contributions tax.

         ðŸ‘‰ Key Takeaway:  To avoid excess contributions tax, it’s important to manage contributions                               carefully and stay within the cap limit before attempting to split.
 

Situation (c): Elena's  Unused Concessional Cap

  • In the 2018–19 financial year, Elena's employer contributed $16,000 to her superannuation, leaving her with an unused concessional cap of $9,000 (out of the $25,000 cap). Since her total super balance was under $500,000, she was eligible to carry this forward.
  • In 2019–20, Elena received a total of $42,000 in concessional contributions, including employer contributions and salary sacrifice. She decided to split $34,000 of these contributions with her partner, Jack, who was working part-time. Elena lodged a valid application after 30 June 2020, using her increased concessional cap of $34,000 (the standard $25,000 cap plus the $9,000 carried forward).
  • Despite the successful processing of the contribution split, Elena later received a determination for excess concessional contributions, as her total contributions exceeded the cap by $8,000 ($42,000 - $34,000).

        👉 Key Takeaway

              Even when using carried-forward unused caps, it's essential to ensure that total concessional                      contributions do not exceed the available limit which is $34000 in Elena's case. Exceeding                    the  cap can still result in excess contributions tax, even if the split is accepted and processed.

 
   

How Spouse Contribution Splits Are Treated?
   

When you split your concessional super contributions with your spouse, the transferred amount is treated as a rollover, not a new contribution for them. Here’s what you need to keep in mind:

  1. Counts Towards Your Cap: The split amount remains part of your concessional contributions, not your spouse's. 
  2. No Change to Contribution Type: The nature of the contribution doesn’t change after it’s split. For example, if you’ve claimed a tax deduction on the contribution, it will still be treated as a concessional contribution on your end, even after being split with your spouse.
  3. No Impact on Your Spouse’s Cap: Your spouse won’t use any of their own concessional cap by receiving the split. The split only affects your super balance, not your spouse.
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Final Thoughts
   

Spouse contribution splitting can be a valuable strategy, but its suitability depends on your individual financial circumstances. To ensure you're making the most informed decision, it's important to consult a qualified financial adviser and stay up to date with the latest rules and eligibility criteria.

 

For more information, visit the ATO’s official guide to Superannuation Contributions Splitting.
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Update your SMSF deed
   

Our SMSF deed includes all the necessary provisions for spouse contribution splitting and is fully compliant with current rules and regulations. If your SMSF deed does not include provisions for spouse contribution splitting, it may need to be updated to allow for this strategy.
   
   

Visit www.trustdeed.com.au for more details or call us on (02) 9684 4199
   

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