Contribution Splitting Explained: How the 85% Rule Works

Contribution splitting in Australia allows you to transfer part of your concessional super contributions to your spouse.

It is not a new contribution.
It is not a tax offset strategy.
It is a rollover of contributions you have already made.

If you are comparing this to spouse contributions for the $540 tax offset, read first:
Spouse Super Contributions vs Contribution Splitting

---

Key takeaways

• Contribution splitting applies to concessional contributions.
• You can generally split up to 85% of eligible concessional contributions.
• It does not create a $540 tax offset.
• It does not reduce your concessional contributions cap usage.
• It is applied for after the end of the income year.

---

What is contribution splitting?

Contribution splitting allows you to apply to your super fund to split certain concessional contributions made to your own super and roll them over to your spouse’s super.

The split amount becomes a rollover super benefit for your spouse.

It does not become a new contribution for them.

That distinction matters for contribution caps.

---

Which contributions can be split?

Contribution splitting generally applies to concessional contributions, including:

• Employer contributions.
• Personal contributions for which you have claimed a tax deduction.

It does not apply to non concessional contributions.

There are restrictions on the type and amount of contributions that can be split. Your fund also has discretion to allow or refuse a request.

---

How the 85% rule works

You will often see contribution splitting described as allowing you to split up to 85% of concessional contributions.

This reflects the fact that concessional contributions are generally taxed at 15% in the fund.

The split limit is based on up to 85% of the eligible concessional contributions for the year.

For example:

• You receive $10,000 of eligible concessional contributions.
• Up to 85% of that amount may be split.
• That equals $8,500.

This percentage reflects the contributions tax that has usually already been deducted.

It is not related to the spouse super tax offset.

---

When can you apply?

You generally apply to split contributions after the end of the income year in which the contributions were made.

Applications must typically be made before the end of the following income year, unless your fund allows a different timeframe.

You apply to your super fund using:

• The ATO Superannuation contributions splitting application form, or
• A similar form provided by your fund.

If you plan to split personal deductible contributions, you must first lodge a valid notice of intent to claim a deduction before applying to split.

Your fund has discretion to allow or not allow the request.

---

How splitting affects contribution caps

Contribution splitting does not change how contributions are counted for cap purposes.

If you make a concessional contribution and later split it:

• It still counts towards your concessional contributions cap.
• It does not count towards your spouse’s concessional cap.
• It is not treated as a non concessional contribution for your spouse.

It is a reallocation. It is not a reset.

---

Eligibility considerations

Not everyone can receive a split contribution.

Eligibility depends on your spouse’s age and super circumstances at the time of the application. Different rules may apply if your spouse has reached preservation age or retired.

It is important to confirm eligibility with your fund before applying.

---

Why people use contribution splitting

Contribution splitting is often used to:

• Even out super balances between spouses.
• Manage long term transfer balance cap considerations.
• Shift super into the name of the younger spouse.

It does not create a tax offset.

It does not reduce your original cap usage.

It may help manage balances strategically over time.

---

Common mistakes

Common misunderstandings include:

• Thinking splitting creates the $540 spouse tax offset.
• Assuming it reduces your concessional cap usage.
• Trying to split non concessional contributions.
• Forgetting to lodge a notice of intent before splitting deductible contributions.

These errors are administrative, but they matter.

---

Example

You receive $20,000 of eligible concessional contributions in a year.

Up to 85% of that amount may be split.

That equals $17,000.

Your concessional cap usage remains based on the full $20,000.

No spouse tax offset applies.

If your goal is the $540 tax offset instead, you must make a direct after tax contribution to your spouse’s super. See:
Spouse Super Contributions Explained

---

Contribution splitting vs spouse contributions

Contribution splitting:

• Applies to concessional contributions.
• Is applied for after the end of the income year.
• Does not qualify for the $540 tax offset.

Spouse contributions:

• Are new after tax contributions.
• Must be received by the fund during the income year.
• May qualify for a tax offset of up to $540.

If you want a side by side comparison, read:
Spouse Super Contributions vs Contribution Splitting

---

FAQs

What does the 85% rule mean in contribution splitting?

You can generally split up to 85% of eligible concessional contributions because 15% contributions tax has usually already been deducted in the fund.

Can I split non-concessional contributions?

No. Contribution splitting generally applies to concessional contributions such as employer contributions and personal deductible contributions.

Does splitting reduce my concessional contributions cap?

No. The original concessional contribution still counts towards your concessional contributions cap, even if you later split it to your spouse.