A re-contribution strategy can be a useful estate planning tool for those who want to minimise the taxable component of their superannuation death benefit paid to non-dependants such as adult children. This strategy involves withdrawing funds from a super account and then re-contributing them back into the account as a non-concessional contribution, effectively converting the taxable component of the withdrawal into a tax-free component.


To implement this strategy, you must meet a condition of release such as retirement or attaining age 65, and have available contribution cap space. The recent changes to the work test and total super balance thresholds for non-concessional contributions have added more flexibility for you to implement this strategy. 


The new rules allow those between 67 and 75 years of age to make non-concessional contributions without meeting the work test. Additionally, the total super balance thresholds that can affect a your non-concessional contributions cap will be indexed by $200,000 for the next financial year, potentially opening up the re-contribution strategy to those who were previously unable to use it due to exceeding the cap.


Implementing a withdrawal and re-contribution strategy can be complex and should be carefully considered in consultation with a financial advisor or accountant. The strategy may have implications for a those eligible for government benefits, your overall retirement income, and the tax implications for your beneficiaries upon your death.


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