Tips & Traps

Splitting of Spouse Contributions

Splitting of Spouse contributions is a very effective way to maximise retirement savings while gaining early access to retirement funds. It is suitable to couples with an age difference. Up to 85% of Concessional contributions can be split between husband and wife.

For example – Jean is aged 40, her preservation age is 60. She is married to Jack who is 50 years of age. Jean can split her concessional contributions (salary-sacrifice and SG contribution) to Jack. The funds would then be available through a TtR strategy when Jack turns 55, effectively bringing forward access to these funds by 15 years.

Notice of deductibility

Individuals need to lodge a notice of deductibility (Section 290-170 – Notice) in relation to Concessional contributions made in the financial year.  The notice must be lodged by the earlier of the time the individual lodges their income tax return or the end of the following year after the contribution was made. The amount of deduction is limited to the amount specified in the original notice and cannot be increased.  It is therefore preferable to overstate the portion of concessional contributions and reduce at a later stage if need be.

Advisers should ensure that the notice has been lodged prior to moving the client into an Account Based pension or rolling them into a new superannuation fund as this would invalidate the notice to claim a deduction.