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SMSFs: changes to new contribution splitting between couples

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:

  1. the "maximum splittable amount" is decreased from 100% to 85% of deductible contributions. It remains at 100% of undeducted personal contributions;
  2. the applicant must specify the amounts of deductible contributions and/or undeducted personal contributions that are to be split;
  3. 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;
  4. 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;
  5. only one valid application may be made per year; and
  6. 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.


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Daniel Hui
Daniel Hui
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+61 3 9258 3563

Qualifications: BCom, LLB (Hons), Monash University

Daniel is a member of Maddocks Tax and Structuring team. He has expertise advising on both direct and indirect taxes. He has represented private and publicly-listed companies, high net worth family groups and not-for-profit organisations in a broad range of tax and duty matters.

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