Traditionally, at the end of the day there is a significant imbalance in the amounts within husband and wife superannuation accounts due, of course, to the stereotypical roles of breadwinner and homemaker for much of their respective working lives.
The introduction of spouse superannuation contribution splitting some years ago was advantageous for two reasons:
- effectively it meant a couple could have twice as much in low taxation superannuation; and
- double the amount which could be withdrawn tax free!
With the capping of contributions to superannuation, the amount which can be held in superannuation is unlimited and in our opinion the next couple of decades will see balances swell to $millions as the younger generations realise 15% taxation is a most attractive tax rate for investments, with proceeds tax free on attaining 60 years of age.
While concessional (deducted) contributions are capped at $25,000 or $35,000, depending on age, we would expect the capping to be relaxed over the next year or so. Further, $150,000 per annum may be tipped into superannuation on a non concessional (undeducted) basis.
Returning to superannuation splitting, the after tax concessional contribution (i.e. 85%) may be transferred each year to your spouse to maximise the available balance. Between 55 and 60 years of age, both would then be able to withdraw the first $180,000 each of the taxable component on a tax free basis!
Of course, the more funds that can be placed in superannuation, the better the ultimate outcome.