Contribution splitting

Over the last few weeks the news is full of the ATO imposing ridiculous assessments for exceeding contributions caps (I exceeded the concessional cap by 1 cent in 2008 so I hope I don't get an assessment). However I thought it would be a good idea to check my non concessional contributions cap. I got a shock when I read the following advice as it would put me over the cap by $170,000.

I researched further and found conflicting advice (URL references included) - I hope Colonial First State is wrong - otherwise I'm in big trouble. Can someone please clarify.

Opinion One: Colonial First State Super Fact Sheet states:

http://www.osfsuper.com.au/osf/pdf/Factsheet10_con_spliting.pdf

How do split contributions work under the contributions caps?
Once contributions are split to your spouse’s super account, they are classed as non-concessional contributions within the spouse account.
This means that any contribution splitting amounts will count towards the spouse’s non-concessional contributions cap.
A cap of $150,000 per year applies for non-concessional contributions. No tax applies to contributions up to this cap.
If your spouse makes or receives contributions above the cap, these excess non-concessional contributions will be taxed at the highest marginal tax rate (currently 46.5% including Medicare levy). However, the OSF will not accept a contribution where we are aware that it will exceed the non-concessional contributions cap.
If your spouse is under age 65, they can bring forward two years of non-concessional contributions and make or receive a larger contribution of up to $450,000 but they will be unable to make any further non-concessional contributions for the next two years.

Opinion Two (RBF)

https://www.superfacts.com/files/superfacts_aus/document/20109912032sxopjroc4823.pdf

Do split contributions count towards the contributions limit?
When the contributions were first made, they counted towards that person’s contribution limit. The receiving partner does not count any contributions received as a result of a contributions split toward their limit.

Opinion Three (Rogerson Kenny)

Self Managed Super Funds | SMSF | Self Managed Super Fund Accountants Melbourne

The contribution split is treated as a rollover into the spouse's account and consists of 100% taxable component. Contributions splitting superannuation benefit does not count towards either Concessional or Non Concessional contributions cap.

 

Hi JB

I don't think you articulated exactly what your question is.

I will do my best to give some points which may clarify:

• Even if you split contributions, those contributions still count towards your contribution caps (either concessional or non-concessional)
• You cannot split non-concessional contributions made after 5 April 2007
• Your non-concessional contribution cap (if under age 65) is $150k per annum or $450k over a three year period (when the 2 year bring forward is triggered)
• A contribution made on behalf of a person's spouse counts towards the receiving spouses cap
• Splitting to a spouse is different from making a contribution directly to a spouses account (splitting does not count towards the receivers contributions caps)

The phrase ...

...on the OSF / Colonial fact sheet appears to be wrong.
They probably didn't bother changing it since you haven't been able to split non-concessional contributions for over 4 years.


JB - I hope the above clarifies your position, if not please provide further information and I will see what I can do.

Thanks
Kris

 

Thanks Kris

Sorry for causing some confusion.

In summary my question was whether Colonial First States Fact Sheet was correct. You have confirmed my thoughts that the Fact Sheet was wrong. The Fact Sheet does state that splitting of non-concessional contributions ceased in 2007 so the Fact Sheet is referring to concessional contributions.

As far as the annual tax return to the ATO is concerned the receipt by my spouse is classed as a rollover and rollovers don't add to the cap.