- Equalize retirement savings: If one spouse has a higher superannuation balance than the other, splitting contributions can help to equalize retirement savings. This can be particularly important for couples who plan to retire at the same time and want to have similar retirement lifestyles.
- Take advantage of lower tax rates: By splitting superannuation contributions with a lower-earning spouse, you can take advantage of their lower tax rate. The lower-earning spouse may pay less tax on the contributions than the higher-earning spouse would have paid if they had made the contributions themselves.
- Maximize contribution limits: Splitting contributions can help you maximize the contribution limits for both spouses. This is especially useful if one spouse has reached their contribution cap, but the other spouse has not.
- Meet eligibility requirements: Splitting contributions can help a spouse meet the eligibility requirements for certain superannuation benefits, such as the government co-contribution.
- Estate planning: Splitting contributions can be used as an estate planning strategy. If one spouse has a terminal illness or is much older than the other, they may wish to maximize the balance of the other spouse's superannuation account by transferring some of their contributions.
It's important to note that there are rules and limitations to superannuation contribution splitting. For example, only concessional contributions can be split, and contributions can only be split once per financial year. It's recommended to seek professional financial advice before making any decisions about splitting superannuation contributions, to ensure it's appropriate for your personal circumstances and financial goals.