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My husband has volunteered to be a house-husband, but he has asked me not to call him that. It means he looks after our two children who are three and four until they reach school age. He has been a public servant but he wants to go back to University part-time to train as a teacher while I go back to my old job as a lawyer. It’s a perfect arrangement, but I would like to ensure his super is still added to and so could you explain how contribution splitting works? And how much can I give him?

Some couples find contribution splitting works for them. This is where one spouse can pass a portion of their super contributions to their partner. The split is actually made after the tax year has ended on June 30. This means your boss puts your money into your super fund – the compulsory 9 per cent – and at the end of the financial year you could redirect to your husband’s fund. As I pointed out, the amount that might be split and given to a spouse comes from the concessionally-taxed contributions, such as the compulsory super, but it can include the money from salary sacrificed sums. As these contributions are taxed at 15 per cent when they enter the super fund, only a maximum of 85 per cent can be split with a spouse. Here’s an example – you earn $100,000 and salary sacrifice the maximum amount after the 9 per cent super is taken out, and that would be the cap of 25 per cent or $25,000. Now 15 per cent of this is taxed when it comes into the super fund – $3750 – so you could give your husband the 85 per cent leftover – $21,250 – or any amount less than that. You would have to inform your super fund that this is your intention and it will happen. Why would you do this? Dealing with financial reasons only, it may help some people access more super earlier (if one spouse is older than the other spouse), it may help to access a lower tax rate on any super withdrawals if one spouse is older than 60, and it may help when the assets test or income test is being applied for social security reasons. On the other hand, you might want to make sure your spouse does not lose out financially – super-wise – when he or she is doing an important family job. Good luck with the new phase of your collective lives.

To understand the different types of superannuation contributions and benefits click here.

Published on: Wednesday, June 26, 2013

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