Q: I have close to $3m in super and am concerned about the extra 15 per cent tax on earnings on the amount over $3m. My partner only has $1m in super – what can we do to even up the balances? We are both in our late fifties. Ingrid
A: You can transfer your concessional super contributions from your own super account to your spouse’s super account each year, known as superannuation ‘splitting’. If you are contributing $30,000 per year, you can split 85% of that amount, or $25,500. This process can be repeated each year, both reducing your super balance and delaying or eliminating your spouse from exceeding a $3,000,000 balance.
Looking further ahead, if you intend to retire after age 60, you can withdraw funds from your super account, and your partner can then contribute those funds to their own super account. If your partner contributes $30,000, they can claim this amount as a tax deduction and, depending on their income, potentially save thousands in tax.
Keep in mind that once an individual’s super balance reaches $2,000,000, no further non-concessional contributions are allowed. Whilst your super balance is above $2,000,000, your spouse’s is not, but the above strategy may accelerate the path to reaching $2,000,000.
The $2,000,000 balance cap also prevents utilising ‘bring forward’ non-concessional contributions, which allows 3 future years of non-concessional contributions to be made in 1 contribution (3 years x $120,000 = $360,000). If your balance exceeds $1,760,000 on 30th June 2025, your ability to utilise the bring forward rules begins to diminish, and once you reach $2,000,000, the option is no longer available.
These are both important considerations if you have other non-superannuation assets which you plan to later contribute to your spouse’s super account.
Finally, the Division 296 proposal has yet to pass into legislation and has already undergone significant changes from the original format. The impact for individuals will be unknown until the finer details are released, most likely in 2026. In any case, it is likely not the last time higher super balances will be targeted for additional tax, so ‘evening out’ super balances may delay or eliminate reaching future caps.
