Comment RECONTRIBUTION and I will send you our strategy pack

Comment RECONTRIBUTION and I will send you our strategy pack.

A recontribution strategy can change the tax components within your super.

After meeting a condition of release, you withdraw an eligible amount from super and contribute some or all of it back as an after-tax, non-concessional contribution.

The goal isn't necessarily to grow your super balance, but to potentially reduce its taxable component and increase its tax-free component.

Much of people's super is taxable, often built through employer contributions, salary sacrifice and personal contributions claimed as a tax deduction.

These concessional contributions are generally taxed at 15% when entering the super fund and form part of your taxable component.

In contrast, non-concessional contributions use money you've already paid tax on. Where no tax deduction is claimed, they generally form part of your tax-free component.

Why does this matter?

If your super is paid as a lump sum death benefit to an adult child who isn't 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.

The tax-free component can generally be paid tax-free.

A recontribution strategy may help reduce the potential tax payable by adult children when you pass away.

It won't automatically eliminate the taxable component of your entire super balance. Your eligibility, access to super, contribution caps, timing and broader retirement plan all matter.

Comment RECONTRIBUTION and I will send you our strategy pack.

General advice only. This information doesn't 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).