Complex Superannuation Strategies

Super Re-contribution Strategy

This is a process where, upon you meeting a condition of release, you withdraw money from super fund and then re-contribute the funds back into your super fund as a personal non-concessional contribution (subject to restrictions with non-concessional caps). This process is used to increase the tax free portion of your super fund benefit. With the introduction of a Transfer Balance Cap limiting how much can be held in a pension account, this might 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 $1.7 million for the 2021-22 financial year).

This strategy of increasing the tax-free proportion of a super balance also provides the key benefits of providing a more tax effective income stream (if taken prior to age 60) as well as decreasing the tax paid on your death if your benefits are paid to a non-dependant for tax purposes.

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 to superannuation;
  • you may be required to pay tax on the amount withdrawn (or re-contribution) if the amount exceeds certain limits