A superannuation recontribution strategy is a strategy designed to maximise the amount of after tax income for a retiree under 60, or non-dependent beneficiaries (e.g. an adult child) of their estate.

To lower the tax payable on a retirement income stream or death benefit payment to a non-dependent, the superannuation member accesses their superannuation and contributes the money back into superannuation as a non-concessional contribution. The money then forms part of the tax free component of the superannuation account.

Woah, what?

For example, Penelope is 61 and of ill health. Her son, Cruz, is 34 and a non-dependent under tax law. Penelope could take a superannuation lump sum (tax free) and recontribute it to her superannuation as an after tax contribution (known as a non-concessional contribution). Then, if she passes, the money might be paid to Cruz tax free.

If she did not do this, the super fund may have to withhold tax on Cruz’s super benefit.

There are limits on superannuation withdrawals and non-concessional contributions. So, as always, you should speak to a qualified professional before taking action on the factual information presented here.

How Does Warren Buffett Identify Stocks To Buy?

Buffett Ebook

Download our free ASX and global investing guide, "How Warren Buffett Pick Stocks" when you join Rask Group's free Investor Club! Rask's Investor Club is designed to help you become a better investor by providing unique up-to-date insights on what's going on in the investing world.

Join Owen and Rask team today. Click here to join our club & download the ebook!

Was this post helpful?
Did this page help you or answer your question(s)?