Turn Taxable Super Into Tax-Free

If you're single, widowed, or divorced, and your goal is to leave as much of your superannuation as possible to your adult children or other non-financial dependants, a recontribution strategy may be worth considering. Once you've retired and have access to your superannuation, a recontribution strategy involves withdrawing money from your super and then contributing it back as a non-concessional contribution. The benefit of this strategy is that it can convert the amount withdrawn from a taxable component into a tax-free component. For example, if you withdraw $100,000 that consists entirely of taxable components, that amount could otherwise attract a potential tax liability of $17,000 when paid to non-financial dependants, based on the 17% tax rate. By withdrawing that money and recontributing it as a non-concessional contribution, the taxable component on that amount is removed, meaning that 17% tax would no longer apply to those funds when they're eventually passed on. Where possible, completing the withdrawal and recontribution in full can make it easier to clearly identify that amount as tax-free. However, for people with larger super balances, the strategy may instead be implemented progressively over a number of years. Depending on your circumstances, different superannuation structures may also make administering this strategy more efficient, particularly where multiple pension accounts are involved. If leaving a tax-effective legacy to your adult children or other non-financial dependants is one of your goals, it's worth discussing whether a recontribution strategy is appropriate for your situation. General advice only. Amy Lehmann is an Authorised Representative (No. 1292710) of Consortium Private Wealth Pty Ltd (AFS Licence 495401).

Disclaimer || The information provided in this post is general in nature only and does not constitute personal financial advice. Amy Lehmann is an Authorised Representative(No. 1292710) of AFSL 495401.