MEDICUS May 2022

Split Strategy Splitting contributions may enable you to build super with your spouse and reduce tax. AMA Financial Services is an Authorised Representative of Consultum Financial Advisers Pty Ltd | ABN 65 006 373 995 | AFSL 230323 This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek advice from a financial adviser and seek tax advice from a registered tax agent. Information is current at the date of issue and may change. You should obtain a copy of the Product Disclosure Statement available from the product provider or your financial adviser and consider this before you acquire a financial product. This information and certain references, where indicated, are taken from sources believed to be accurate and correct. To the extent permitted by the Law, Consultum, its representatives, officers and employees accept no liability for any person that relies upon the information contained herein. From time to time, we may send you informative updates and details of the range of services we can provide. If you no longer want to receive this information, please contact our office to opt out. Contributions splitting Super contributions splitting generally allows you to split up to 85 per cent of your employer super contributions and personal deductible contributions with your spouse. What’s in it for me? Boost the super balance of your spouse and grow your retire- ment savings as a couple. Earlier access to super benefits and tax concessions if your spouse is older than you. Funding insurance through super for your spouse. Optimise super benefits by utilising two low rate caps for lump sum taxable withdrawals between preservation age and age 60. Who can this strategy work for? Contributions splitting may be suitable if you: pay a higher marginal tax rate than your spouse, and wish to fund insurance cover for your spouse through super have a spouse eligible to receive super contributions have a spouse who can access super before you want to boost your spouse’s super savings have or expect to have $1.7 million or more in super but not your spouse. How does it work? Generally, contributions splitting works on an ‘annual split’ ba- sis. This means, once a year, you may be able to apply to your super fund to request to split eligible contributions made in the previous financial year with your spouse. Generally you need to apply before 30 June of the following financial year to request to split contributions in the previous year. The splitting of contributions from your super to your spouse’s super will be treated as a contributions-splitting super benefit. Eligible contributions you split in favour of your spouse will not count towards your spouse’s concessional contributions cap. This is because the contributions, when originally paid into your fund, were assessed against your own concessional contributions cap. If you would like to discuss this further or how it might impact you, speak to the AMA Financial Services team on 1800 262 346 or email advice@amafp.com.au . Concessional contributions Concessional contributions are generally subjected to 15 per cent contributions tax in your super funds up to set limits. They generally include employer contributions such as Super Guarantee, salary sacrifice contributions and personal contributions for which a tax deduction has been allowed. Concessional contribution caps An annual cap on concessional contributions applies each financial year. For the 2020/2021 financial year the cap is $25,000 regardless of your age, however your cap may be higher if your total superannuation balance was less than $500,000 in 30 June 2020. If you exceed the cap, excess concessional contributions will generally be included in your assessable income and taxed at your marginal rate. You will be entitled to a tax offset equal to 15 per cent of your excess concessional contributions 1 Note: 1. An interest charge also applies to account for the deferral of tax. Individuals can elect to withdraw up to 85% of their excess concessional contributions from their superannuation. Depending upon the amount effectively withdrawn, excess concessional contributions may also count toward the non-concessional contributions. 2. https/ /www.ato.gov.au/individuals/Super/Accessing-your-super/ Before splitting You should be aware that splitting contributions: is not allowed, if your spouse is age 65 or over, or is between preservation age 2 and 65 and has retired is not allowed if you have rolled over or withdrawn your entire benefit is not offered by all super funds is subject to preservation rules and contributions generally cannot be accessed until you retire on or after preservation age or you reach age 65. 50 M E D I C U S M AY 2 0 2 2 F I N A N C E