A specialist superannuation lawyer has noted a proposal to allow for the splitting of super between couples so they can even out their fund balances may be a way to sidestep the Division 296 tax.
Townsends Business and Corporate Lawyers superannuation special counsel Michael Hallinan noted the Superannuation Legislation Amendment (Tackling the Gender Super Gap) Bill 2025, introduced as a private member’s bill by Liberal Senator Jane Hume late last week, could undermine the impact of the impost on couples and the revenue the government would receive.
If enacted, the bill would allow spouses to evenly split their superannuation balances on an annual basis and the partner with a higher balance could provide their spouse with a top-up limited to the amount that would raise the latter’s balance no higher than the general transfer balance cap.
The explanatory memorandum for the bill stated this restriction would be labelled as the ‘spousal redistribution limit’ and would act as a ceiling of what could be rolled over, rather than a floor, with rollovers lower than the limit also allowed.
Hallinan said the bill contained good ideas from a super reform point of view, while adding pressure on the government’s proposed tax on super fund members with high balances.
“This reform is the most superannuation-friendly reform from the coalition in the last 20 years – in fact, since the Costello simplification of 2007,” he said.
“The big picture is it achieves the stated aim of reducing – if not eliminating – between spouses the gender gap in super balances and it is manifestly a female-favourable policy, given females usually have lower super balances.
“It will materially reduce the adverse impact of Division 296 and very much reduce the projected revenue from Division 296.
“It politically skewers Labor. If they are against it, they are supporting gender imbalance and if they support it, their revenue projections for Division 296 tax are toast.”
He noted the only issue with the proposal was the receiving spouse must be aged under 65 at the time the application to transfer is made, but there was no age limit on the spouse making the rollover and “if the upper age limit for the receiving spouse was age 75, then the proposal would also be perfect”.
In terms of its operation, the bill stated the rollovers would only be open to those in accumulation phase who have one superannuation account, and would retain their original contribution characteristics, including the proportion of concessional or non-concessional components.
Additionally, since the rollovers would not be considered a contribution, the funds moved to the receiving member would also retain the same taxed and untaxed proportions they held prior to the rollover.
