The Federal Government has introduced legislation that will finally deliver on its 2004 election promise on superannuation splitting.
Assistant Treasurer Mal Brough announced that the legislation had been introduced to the Parliament last week, noting that it contained two important amendments to the earlier drafts — that splitting would be voluntary on superannuation funds, and that the start date would be brought forward to January 1, 2006, six months ahead of schedule.
He said the earlier start date meant contributions could be made on or after that date and be eligible to split.
Under the new rules, a superannuation fund member can request at the end of each financial year that contributions made in the previous year be split with their spouse.
According to the explanatory memorandum prepared by the Treasury, split contributions will take the form of a transfer, roll-over or allotment of a member’s benefit to their spouse, with the amount to be split limited to the total of the contributions made in the previous year.
It said the superannuation fund would then give effect to the request by transferring the relevant amount from the member’s account to an account for the spouse in either the same fund or a different fund.
The explanatory memorandum makes clear that superannuation funds cannot be compelled to offer super splitting to members, but can offer it as a service.
The changes were welcomed by the financial services industry.
Investment and Financial Services Association deputy chief executive John O’Shaughnessy said: “Splitting superannuation in the contributions phase will allow a couple to share access to two tax-free thresholds and two reasonable benefit limits.”
