How a Recontribution Strategy Can Reduce Tax on Your Super for Future Generations

Did you know your adult children could pay up to 17% tax on your super if they inherit it? A recontribution strategy can help reduce, or even eliminate, this tax, allowing you to leave more of your wealth to your family.

A recontribution strategy works by withdrawing a lump sum from your super (once you meet a condition of release, typically aged 65+ or retired) and then recontributing it back as a non-concessional (after-tax) contribution. This converts part of your taxable component into tax-free dollars, which can make a significant difference if your super is eventually passed to adult children or other non-dependant beneficiaries. While super left to a spouse or dependent children under 18 is generally tax-free, adult children can face up to 17% tax on the taxable portion of your balance. A recontribution strategy can help reduce this tax, keeping more of your super in your family’s hands.

Here’s an example of how it works:

Before Strategy

• John, 65, single, has $600,000 in super, all taxable.
• If John passes away, his adult child could pay around $102,000 in tax (600k × 17%).

After Strategy

• John withdraws $360,000 and recontributes it using the bring-forward rule.
• His super remains $600,000, but 60% is now tax-free.
• If John passes away, only $240,000 would be taxable, and the tax bill drops to ~$40,800.

Tax Saved: ~$61,200

If John had a spouse, his super would generally pass to them tax-free, regardless of the taxable or tax-free componen

A recontribution strategy can be a simple yet powerful way to reduce tax on inherited super, convert more of your balance into tax-free dollars, and help you leave more money for your loved ones. If you’d like to explore how this strategy could benefit you or someone you know, speak with one of our advisers today.

This article provides general information only and does not take into account your personal circumstances. You should seek personalised financial advice before making any decisions.