$25,500 superannuation ‘hack' that could save Aussies thousands: ‘Clock ticking'

Yahoo

16-05-2025

Aussie couples have until June 30 if they want to take advantage of a superannuation "hack" that could help them save tax, boost their Centrelink age pension eligibility and potentially give them access to a bigger retirement nest egg sooner.
Super contribution splitting allows couples to transfer up to 85 per cent of concessional super contributions made in the previous financial year from one partner to another. The application can usually only be made once the financial year is over.
UniSuper state manager of advice Derek Gascoigne told Yahoo Finance this meant couples keen to take advantage of the strategy for the last financial year only had a limited window of time to act, with the "clock ticking".
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'Once the clock ticks over onto the 1st of July 2025, then an individual can only go back and split what they made during the 2024 and 2025 financial year,' he said.
'The window to go back and split the 2023-24 financial year is closing rapidly, hence the sense of urgency.'
Importantly, couples can only split concessional contributions, which include contributions made by your employer, or any personal contributions you've made yourself.Super contribution splitting can be made to a spouse's super account, which includes de facto spouses.
There is no age limit for the splitting partner, but the receiving partner must be under the age of 65, or between 60 and 65 and not retired.
Gascoigne said contribution splitting had to be done 'manually' each year and you had to put in an application with your super fund before June 30.
'It's rare, but not all super funds offer it; it's not compulsory for super funds to offer it,' he said.
'So it's always a case of people checking their super funds to make sure they can do this and there's a form to fill out.'
Gascoigne gave the example of a person who made $30,000 worth of gross concessional contributions, which is the current concessional contributions cap, last financial year.
This then gets taxed at 15 per cent, so the person can split up to 85 per cent of the amount with their partner. That means they can transfer $25,500 into their partner's account.
Aussies can also take advantage of carry forward rules, which allow eligible people to carry forward any unused concessional contributions cap amounts from up to five previous years.
So if one partner made $60,000 of concessional contributions last financial year, they could still transfer 85 per cent of that amount ($51,000) to their partner's super this year before June 30.
The amount transferred does not count towards the partner's contributions cap and is treated more like a transfer or rollover.
Gascoigne said there are a few 'strategic' reasons why couples may want to consider contribution splitting, with UniSuper noting it could potentially save couples thousands of dollars.
Firstly, there could be tax benefits to equalising the two super balances.
'So often you've got Partner A with most of the super in their name and Partner B has less,' he told Yahoo Finance.
'[Contribution splitting] can lead to, for example, both partners being able to potentially hold more money in the tax-free investment environment of the retirement pension phase later on because Partner A is subject to transfer balance cap limits.'
The government has announced plans to increase the tax rate for super earnings from 15 to 30 per cent for balances over $3 million. Contribution splitting could help you avoid hitting this limit.
Secondly, couples who have an age difference may benefit from the strategy.
'They might split some of the super on a regular annual basis from the younger spouse to the older spouse,' he said.
'Aggregating the super wealth into the name of the person who's likely to be in a position to access that money earlier, they could use it for potentially starting income streams, or it might be accessible as a lump sum to pay down debt.'
Likewise, splitting super from an older to a younger spouse could help reduce assessable assets for Centrelink age pension benefits.
The younger spouse's superannuation won't be counted by Centrelink while they are under the age pension age.
Gascoigne said it's worth considering your partner's super fund, including fees and investments, before you split.
'Are you going from a lower fee fund to a higher fee fund, which would take a bit of the shine off?' he said.
'If you are moving from Partner A's account, which is invested at a particular level of risk, and investing in Partner B's account, which is at a different level of risk, is that what you want?'
Gascoigne said it was worth checking with your individual super fund to see if any administrative deadlines applied.
It can also be worth seeking financial advice to ensure the strategy is right for your circumstances.