Spouse Super Splitting – Why Do It

Today I want to talk about a way to grow your super without penalising your future pension entitlements.  And that way is spouse super splitting.

Spouse super splitting means that you are effectively transferring some, but not all, of your super contributions to your spouse.

Let me explain why you would do it.

Let’s take a couple, Amy and Jeff.  Amy is 55 and Jeff is 60.  Any has $100,000 in super and Jeff has $250,000.

Jeff plans to retire when he is 67 and eligible for the pension.

Jeff is currently on a good income and expects his super contributions over the next 7 years will push the couple’s assets over the pension assets test, currently $380,500.  And as a result Jeff may not get the full pension because of this.

And this is where spouse super splitting can work in Amy and Jeff’s favour

Jeff, providing he complies with the rules, he can effectively roll over as much as 85% of his prior year super contributions to Amy for the next 7 years.

So by the time Jeff is 67, his super balance is likely to be below the assets test threshold, he will get the full pension entitlement.

Amy’s super is higher, but because she will be under pension age for a further 5 years, Amy’s super does not count in the couple’s pension asset test for the next 5 years.

So, by planning ahead and starting to do spouse super splitting today, Amy and Jeff are likely to be in a better position financially when Jeff retires.

And this is how you can grow your super without penalising your future pension entitlements.

How Do you split you super with your spouse

In theory, this is a simple process, complete a form with all the required information and provide this to your superfund and they should handle all of this.  The Australian Taxation Office has designed a form specifically for this which you can get here.  But check with your superfund first to ensure that they accept this form.  They may have another form you need to fill in.

Once the appropriate form is filled in, make sure both spouses sign the paperwork and send this off to your superfund.

If you want more tips and ideas of how to improve the health of your wealth and get off the treadmill of working till you drop, why not join my meetup group and get notice of my upcoming live and free events.  Simply click on the link below

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Do you and your family a favour and start taking steps so you can improve the health of Your Wealth and get off the treadmill of working till you drop.

Wayne Wanders

The Wealth Navigator

wayne@thewealthnavigator.com.au

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