SMSFs: changes to new contribution splitting between couples | ClearLaw Legal Bulletin

December 2005

New considerations to decide if an "interdependency relationship" exists

SMSFs: changes to new contribution splitting between couples

New Victorian land tax laws: some good news some bad

Intermediaries using Cleardocs

The legal information and commentary on this site is general only. Documents ordered through Cleardocs affect the user‘s legal rights and liabilities. To assess their suitability for the user, legal, accounting and financial advice must be obtained.

Lawyer in Profile

Michael Taylor-Sands
Senior Associate, Commercial Group
Phone: 03 9288 0555

Michael joined the Revenue Group of Maddocks in 2005 having previously been a Senior Associate at Baker & McKenzie.

Michael has considerable experience in consulting on tax and stamp duty issues to a wide range of corporate and non-corporate clients. He has advised large multi-national and Australian corporate groups in the manufacturing, property development/investment and gaming/casino industries. He advises on the tax implications arising from various forms of transactions, including acquisitions and divestitures, corporate reorganisations and capital raisings. He has had particular experience with inbound investment for both corporate groups and individuals and regularly advises in relation to Capital Gains Tax, CFC/FIF rules, withholding tax and Australia's tax treaty network.

An amended version of the Bill containing the proposal to allow spouses to split SMSF contributions passed through Parliament last week.

Julian Smith and Jacqueline Partridge

In ClearLaw last month, we told you about the draft regulations that allow couples (including de facto couples) to split their contributions between their funds. This legislation helps couples to avoid one spouse accruing super benefits above their reasonable benefits limit (and being taxed accordingly), whilst the other spouse has super benefits well below those limits. In sum, it allows couples to accrue more super benefits between them which will be concessionally taxed on retirement.

The regulations which were released on 12 October 2005 have now been amended and were passed last week.

The amendments are:

the "maximum splittable amount" is decreased from 100% to 85% of deductible contributions. It remains at 100% of undeducted personal contributions;
the applicant must specify the amounts of deductible contributions and/or undeducted personal contributions that are to be split;
when splitting:
- deductible contributions, the amount specified must be no more than the taxed post-June 1983 component that would form part of an ETP payable if the member withdrew the entire benefit at the time of the split;
- undeducted personal contributions, the amount must be no more than the undeducted personal contributions component that would form part of an eligible termination payment (ETP) payable if the member withdrew the entire benefit at the time of the split;
if the receiving spouse is either aged less than the preservation age, or is aged between the preservation age and 65 years and is not permanently retired, then they will be required to make a statement acknowledging that they will not be able to access the amount at the time it is transferred to them;
only one valid application may be made per year; and
valid applications must be effected by the Trustee within 90 days.

For other details about splitting contributions that are not affected by the amendments, see ClearLaw November 2005

The amended regulations were released on 22 November 2005 and have now passed through Parliament.

New user? Register & login for FREE

To set up on Cleardocs, all you need to do is key in your name, industry, email and password. Then you're ready to create Cleardocs documents. It only takes a few minutes. (There's no joining fee. Just a pay per use document fee.)

Existing users wanting to start a new document, log in (top right)