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David Amos

Sep 04, 2023

Contribution Splitting

in SMSF Technical Forum

I have a query from a financial advisor about contribution splitting:

Some APRA super funds say that “you may be able to split”.

Some funds say it’s the ATO that may have a problem with splitting more than $27,500

My query relates to spouse splitting of more than $27,500

Example:

If spouse A contributed say $80,000 into his super in FY2023

Can they then split this contribution, ex tax ($68,000) into spouse B super in FY2024

Spouse splitting allows splitting concessional contributions made in previous FY.

Any thoughts?

1 comment

Comments (1)

The Auditors Institute Ltd

Sep 06, 2023

The regulations contained within Division 6.7 of the Superannuation Industry (Supervision) Regulations 1994 set out the requirements that need to be met in relation to spouse contribution splitting.

It is assumed that in the scenario at hand, in FY2023 spouse A satisfied the requirements to make a concessional contribution of $80,000 under the five-year catch-up concession in relation to unused concessional contributions. The chief requirements being that spouse A had a sufficient amount of unused concessional contributions and that as of 30 June 2022 spouse A had total superannuation balance of less than $500,000.

Whilst the concessional contribution made in FY2023 is clearly in excess of the yearly concessional contributions cap of $27,500, this does not prevent a split of $68,000 (being 85% of $80,000) into spouse B's superannuation account in FY2024.

Under Regulation 6.40:

maximum splittable amount, in relation to a financial year, means:

(a) for taxed splittable contributions — the lesser of:

(i) 85% of the concessional contributions for that financial year; and

(ii) the concessional contributions cap for that financial year;

In this context the "concessional contributions cap" is increased to reflect an individual's unused concessional contributions where they are capable of accessing the five-year catch-up concession (refer to section 291-20(3) of the Income Tax Assessment Act 1997).

A link to the appropriate ATO form for such contribution splits is provided below:

https://www.ato.gov.au/assets/0/104/2244/2335/c47a9e99-a996-46b3-9df3-87f3ef55fa73.pdf