We often forget that it’s the little things we do over time that make a difference.
This series of $10 tips give some simple ideas which you can use to improve your financial affairs for the cost of only two cups of coffee a week.
[heading]Tip 19: Splitting your Super with a spouse[/heading]
Not many people realise that you can split the contributions made into Superannuation by your employer with a spouse.
So why would you want to do this?
Here are five reasons why:
- Tax – Superannuation contributions provide a greater benefit for higher income earners than lower income earners. Therefore having the higher income earner contribute into Super before tax may reduce your overall tax obligations.
- Access – if you are over the age of 55 and retired, you may be able to make a lump sum withdrawal from your Super. If one spouse is going to retire earlier, or is older, then earlier access to the funds may be available.
- Exemption – Superannuation is an exempt asset for Centrelink until you reach pension age. Holding funds in the youngest spouse’s name may maximise government support.
- Income – by accumulating two Superannuation portfolios for each spouse, you may be better positioned to generate your income in retirement than if all the assets are held in a single name.
- Estate planning – Superannuation can pass outside of your will. Some people may benefit from different beneficiaries to your will, especially given some of the complex blended and second families.
How does it work?
You can only split 85% of the concessional contributions made in the previous financial year and not all Super funds allow splitting.
What do I need to do?
Superannuation is a complex financial structure. To talk to us and see if spouse Super splitting would work for you, give Debbie a call on (02) 4941 6000 to arrange an appointment.