Contribution splitting

The Federal Government introduced contribution splitting which came into effect at the start of 2006.

This gave members and their spouses greater opportunity to save more of their super at concessional tax rates by taking advantage of two tax-free thresholds. (one for you and one for your spouse).

However, the Federal Government has issued new rules which come into effect on 2 April 2007 that do not allow super funds to split personal after-tax contributions made after 5 April 2007.

In addition, from 1 July 2007 the maximum (before-tax) contributions that can be split in a year will be the lesser of:

• 85% of employer and salary sacrifice contributions (now called concessional contributions) received by a fund for a member, and
• the concessional contribution cap - an annual limit of $50,000* on contributions from before-tax pay.

* $50,000 is the annual limit for members who are under age 50. There will also be a five year transitional period until 30 June 2012 which allows an annual limit of $100,000 for members who are aged 50 or over. It is unclear whether members over age 50 can split amounts up to this higher limit.

It will still not be possible to split amounts that have been rolled over to AUSCOAL Super or transferred from an overseas fund. It is important to remember that all contributions are preserved and only able to be accessed after a condition of release has been satisfied.

The Government changes to superannuation.

The changes come into effect from 1 July 2007, and may lessen or even cancel out the benefits of splitting contributions. As always, the Trustee recommends you speak to a licensed financial adviser about your personal situation before making any decisions about your super.

If you wish to apply to split your contributions, further information and a Contribution Splitting form are available, or phone us on Toll Free 1300 AUSCOAL.