Comment RECONTRIBUTION and I will send you our strategy pack

Comment RECONTRIBUTION and I will send you our strategy pack.

A recontribution strategy may help tidy up the taxable component within your super. For many people, this is a significant part of their balance because it is commonly built through employer contributions, salary sacrifice and personal contributions where a tax deduction has been claimed.

Why can this matter?

If a super death benefit is paid as a lump sum to an adult child or another beneficiary who is not a death benefit dependant for tax purposes, tax may apply to the taxable component. The taxed element is generally taxed at up to 17%, including the Medicare levy.

That is why this strategy can be relevant for people who plan to leave super to adult children, or to other adult beneficiaries who may not be tax dependants.

It can be particularly important for people whose spouse has already passed away. A lump sum super death benefit paid to a spouse is generally tax free, but the tax outcome may be different when super ultimately passes to adult children or other non dependant beneficiaries.

Super also does not always pass under your will. Depending on your beneficiary nomination, the fund rules and trustee discretion, it may be paid directly to a nominated beneficiary or to your estate. This can become especially important in blended families or more complex family situations.

A recontribution strategy may help increase the tax free component of super and reduce the potential tax paid by adult beneficiaries in the future. It can also be a valuable prompt for a broader family conversation about beneficiary nominations, estate planning and financial education for adult children.

Comment RECONTRIBUTION and I will send you our strategy pack.

General advice only. This information does not take into account your objectives, financial situation or needs. Consider whether it is appropriate for you and seek personal advice before acting. Superannuation and tax laws can change, and tax outcomes depend on individual circumstances.

Amy Lehmann is an Authorised Representative (No. 1292710) of Consortium Private Wealth Pty Ltd (AFS Licence 495401).