Super Re-contribution Strategy

This is a process where upon meeting a condition of release, a member withdraws money from their super fund and then re-contributes the funds back into their super fund as a personal non-concessional contribution (subject to restrictions with non-concessional caps). The aim of this strategy is to increase the tax-free portion of the members super fund benefit by converting a taxable component into a tax-free component. The strategy will be particularly beneficial where the super funds are paid upon the death of a member to a non-tax dependant who will be subject to tax on receipt of a taxable amount. Reducing the taxable component of the member’s super, will reduce the amount of tax payable by a non-tax dependant. With the introduction of a Transfer Balance Cap limiting how much can be held in a pension account, the re-contribution strategy might also be a valuable strategy for transferring funds between members of a couple from the member who exceeds or is close to exceeding their individual personal Transfer Balance Cap threshold to the member of the couple that is well below their Transfer Balance Cap. This would assist in maximising the combined amount of funds able to be held in pension phase by the couple. (Please note: The general Transfer Balance Cap is currently set at $2 million for the 2025-26 financial year.)

This strategy must be planned carefully as:

• you must be eligible to make the withdrawal from super;
• you (or your spouse) must be eligible to re-contribute the funds back into superannuation subject to contribution caps and age-based restrictions;
• you may be required to pay tax on the amount withdrawn if you are aged under 60 years of age.