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Spouse contribution splitting: a strategic approach to retirement planning

17th Jan, 2025

As retirement approaches, couples often discover a significant imbalance in their superannuation accounts. This disparity can become crucial when planning for retirement, and addressing it proactively can be beneficial for various retirement strategies.

Your individual total super balance as of 30 June each year impacts your ability to implement various super strategies in the following financial year. Key strategies where your total superannuation balance (TSB) is a condition of eligibility include:

  • making non-concessional contributions when your TSB is below $1.9 million;
  • utilising carry-forward provisions for large concessional contributions when your TSB is below $500,000; and
  • claiming tax deductions for personal contributions at ages 67–74 when your TSB is below $300,000.

When planning for retirement, the Age Pension is a consideration for many. The asset test only includes superannuation for individuals of pension age. If there’s a significant age difference between spouses, directing more super to the younger spouse could potentially maximise Age Pension entitlement at retirement.

Spouse contribution splitting allows you to transfer up to 85% of your annual concessional contributions to your spouse’s super account.

Key points:

  • eligible contributions include superannuation guarantee, salary sacrifice and tax-deductible personal contributions;
  • the maximum annual split is generally $25,500 (85% of the $30,000 concessional contributions cap for individuals);
  • only contributions from the previous financial year may be split;
  • the receiving spouse must be aged under 65, or 60–64 and not retired;
  • the split is considered a rollover and doesn’t affect the receiving spouse’s contribution caps.

Check if your fund offers spouse contribution splitting, as it’s not mandatory for all funds.

Apply for contribution splitting after the end of the financial year in which the contribution was made. If you roll over or withdraw your entire super balance before the financial year’s end, you can apply to split the contributions within that same year.

Spouse contribution splitting can help couples equalise their superannuation balances and optimise retirement outcomes. Consider your unique circumstances and seek professional advice to ensure this approach aligns with your long-term financial goals.

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Super, KiwiSaver and the Trans- Tasman Retirement Savings Portability Scheme

17th Jan, 2025

If you’re thinking of making a permanent move between New Zealand and Australia, what do you do about your superannuation fund or KiwiSaver scheme? Under the Trans-Tasman Retirement Savings Portability Scheme, retirement savings can be transferred between Australia and New Zealand.

It’s important to note that the scheme is voluntary – for individuals, Australian superannuation funds and KiwiSaver scheme providers. Check with your Australian super fund or your New Zealand KiwiSaver scheme provider to confirm that they participate. Only APRA-regulated complying super funds and NZ KiwiSaver scheme providers can participate in the transfers, and not all super funds will accept KiwiSaver transfers.

Transfers from Australia to New Zealand

  • Eligibility: You must be aged under 65 (the current eligibility age for NZ super) and provide evidence of permanent emigration to NZ.
  • What you can transfer: Your entire balance can be transferred from a complying APRA-regulated super fund; you may also be able to transfer ATO- held unclaimed super money. Exclusions apply for self managed super funds (SMSFs) and certain interests.
  • Where you can transfer: To any participating KiwiSaver scheme.
  • Contribution caps: There’s no limit on how much you can transfer, as the NZ system doesn’t have contribution caps.
  • Tax on transfers: A transfer from your super fund to a KiwiSaver scheme is not taxed, and withdrawals are tax-free once you are legally allowed to access them. Check for any other possible NZ tax implications with your financial advisor.
  • Access to funds: Transferred Australian savings can’t be used to buy your first home, and can’t be transferred to a third country if you move again.

Funds are held in two parts – you can access the Australian component when you reach age 60 and are retired; for the NZ component you’ll need to reach the NZ retirement age (currently 65).

  • Moving back to Australia: If you decide to move back, you’ll need to find a fund that will accept transfers from a KiwiSaver scheme and be able to demonstrate which savings components previously counted toward your non-concessional contributions cap and the tax-free and taxable components of your savings so they keep that status. If you don’t provide the information, you may have to pay excess contributions tax or additional tax.

Transfers from New Zealand to Australia

  • Eligibility: You must be aged under 75 and provide evidence of permanent emigration to Australia.
  • What you can transfer: Your entire KiwiSaver scheme balance can be transferred.
  • Where you can transfer: To any Australian APRA- regulated complying super accepting KiwiSaver transfers. You can’t make a transfer to an SMSF.
  • Contribution caps: NZ-sourced savings are treated as non-concessional contributions and are subject to the non-concessional cap. Contributions over the cap might result in excess non-concessional contributions and you might need to release an amount or pay extra tax. Your total superannuation balance also impacts what you can contribute.
  • Tax on transfers: Transfers from an NZ KiwiSaver scheme to an Australian super fund are not taxed. Withdrawals are tax-free in retirement once conditions of release are met.
  • Access to funds: KiwiSaver scheme savings can’t be transferred to an SMSF, and they can’t be transferred to a third country if you move again. Funds will be held in 2 parts – to access the Australian component you’ll need to be aged at least 60 and meet the Australian definition of retirement; for the NZ component you’ll need to reach the NZ retirement age (currently 65).
  • Moving back to NZ: If you decide to move back, you’ll need to find a fund that will accept transfers from an Australian super fund. The rules for transferring super funds to KiwiSaver will apply.
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