Comment RECONTRIBUTION and I will send you our information pack

Comment RECONTRIBUTION and I will send you our information pack.

A recontribution strategy involves withdrawing money from super once eligible, then contributing it back as a non-concessional contribution.

Importantly, it does not automatically increase your super balance. If you withdraw and recontribute the same amount, the strategy changes your super's tax components rather than creating more money.

Withdrawals generally come out in the same taxable and tax-free proportions as your existing balance.

When recontributed as a non-concessional contribution, with no tax deduction claimed, the amount generally becomes part of the tax-free component.

The remaining taxable component does not disappear. However, recontributing after-tax money may increase the tax-free component and reduce the overall proportion of your balance that is taxable.

This can be particularly relevant if you intend to leave super to adult children who are not death benefit dependants for tax purposes.

Super death benefits paid to a spouse are generally tax-free. However, if a lump sum is paid to an adult child who is not a tax dependant, tax may apply to the taxable component. The taxed element is generally taxed at up to 17%, including the Medicare levy.

For those with large super balances, this can mean significant tax.

A recontribution strategy may reduce potential tax for adult beneficiaries, but requires careful consideration of super access, contribution eligibility and caps, timing, beneficiaries and estate planning.

Comment RECONTRIBUTION and I will send you our information pack.

General advice only. This information does not consider your objectives, financial situation or needs. Consider its appropriateness and seek personal advice before acting. Superannuation and tax laws can change, and outcomes depend on individual circumstances.

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