Complex Superannuation Strategies

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 is to increase the tax-free portion of the members super fund benefit and will be beneficial for reducing tax where a member is under 60 years of age or where the funds are paid to a non-tax dependant upon the death of the member. With the introduction of a Transfer Balance Cap limiting how much can be held in a pension account, this might also be a valuable strategy for transferring funds between members of a couple where one member exceeds or is close to exceeding their individual personal Transfer Balance Cap threshold (Please note: The general Transfer Balance Cap is currently set at $1.9 million for the 2023-24 financial year). The strategy of withdrawing and re-contributing funds can be used to transfer funds from the member of a couple close to their transfer balance cap to the other member of the couple with a low super balance thereby maximising the combined amount of funds able to be held in pension phase by the couple.

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;
  • you may be required to pay tax on the amount withdrawn if you are aged under 60 years of age.