Do the Budget proposals really “destroy the benefit of splitting”?
The pre-Budget position A person can make after tax contributions for their spouse to boost the spouse’s superannuation savings. This is a good strategy for spouses who do not have an RBL problem. (It doesn’t work for those with RBL problems because the investment income on the contributions will become taxable benefits on withdrawal.) This strategy is currently considered to be a good way to generate investment income in a tax sheltered environment. Currently, there is no limit to the amount of after tax contributions a person can make for their spouse. However, the tax effectiveness of the approach is currently limited by the anticipated investment earnings and the aggregate superannuation savings of the spouse in relation to their RBL. The Budget proposals The Budget proposals which reduce the effectiveness of after tax contributions to a spouse are: • most critically Immediate restriction to $150,000 per year (from Budget night) on undeducted contributions made by an individual, wi
