Know about the super re-contribution strategy
A re-contribution strategy means withdrawing money from super and putting it back as a non-concessional contribution — lifting the tax-free component and shrinking the taxable component. The headline benefit is less tax on a future super death benefit for non-dependant beneficiaries (typically adult children), and sometimes a better tax-free / taxable mix for retirement. This factsheet explains how it works, includes an interactive tax-saving calculator and a readiness checklist, and lists the ATO materials behind it.
English & Chinese PDF versions of this factsheet are available on request — please contact us.
* General information only. Kristy Pan & Co. provides this material for general knowledge; it does not constitute tax or financial advice and does not take account of your specific circumstances. This information is current as at 17 June 2026; we will do our best to update it when any policy or legislation changes. Please contact us before acting.
What it is
At its simplest, a re-contribution strategy is two real transactions: take an eligible amount out of super, then put it back in as an after-tax (non-concessional) contribution. Money that comes back in this way joins the tax-free component, so over time you can shift a balance from mostly taxable to mostly tax-free.
Step 1 · Withdraw
Once you have met a condition of release, withdraw an eligible amount — a real payment out of the fund.
Step 2 · Re-contribute
Pay it back in as a non-concessional contribution, within your cap — it lands in the tax-free component.
Why it helps
Super is made of two parts. Non-concessional contributions sit in the tax-free component; employer and salary-sacrifice (concessional) contributions and earnings sit in the taxable component. When you die and a non-dependant (such as a financially independent adult child) receives your super, only the taxable component is taxed.
A dependant → tax-free
A spouse (or a child under 18, or a financial / interdependent dependant) is a death benefits dependant — they receive the benefit tax-free either way.
A non-dependant → taxed
An independent adult child pays tax on the taxable component — commonly 15% + 2% Medicare on the taxed element. Re-contribution shrinks that taxable slice.
Not only about death benefits.
A better tax-free / taxable mix can also help during retirement — for example, equalising balances between spouses, or improving the flexibility of how pensions and lump sums are drawn. The death-benefit saving is usually the headline, but the components matter while you are alive too.
Tax-saving calculator
Enter your age, super balance and how much of it is currently taxable, then choose the contribution cap to use. The calculator estimates the death-benefit tax a non-dependant would save — bounded by what you can actually re-contribute under the cap.
Re-contribution & death-benefit tax
Indicative only. Assumes a taxed fund and the 15% + 2% Medicare rate on the taxed element (any untaxed element can be taxed higher). It does not check your total super balance, prior contributions, or your specific eligibility — we confirm those before anything is done.
Steps to get the benefit
The strategy is simple in concept but unforgiving on detail. Each of these has to be right — the checklist below is the one we run before executing, especially in an SMSF.
- Confirm you can withdraw — you have met a condition of release (e.g. age 60+ and retired, or 65+).
- Check you have cap space — the re-contribution counts toward your non-concessional cap.
- Make the withdrawal as a real payment out of the fund — not a journal entry.
- Make the re-contribution as a real non-concessional contribution.
- Keep records of the withdrawal, the contribution and your cap position for the year.
SMSF re-contribution readiness checklist
Tick what is true before executing — nothing here is saved or sent.
If steps are missed
Done correctly the outcome is clean; done loosely, it can backfire. The two most common problems:
Cap breaches and paper-only transactions.
Over the cap: if the re-contribution exceeds your non-concessional cap, excess contributions tax or other consequences can apply — wiping out the benefit. Paper only: you cannot just move money around with a journal entry. The ATO looks for a real payment out and a real contribution in; a benefit must actually be cashed, and a contribution is made only when the fund receives the money. And remember the proportioning rule — a withdrawal comes out of the taxable and tax-free components in proportion, so the strategy works because the money returns 100% tax-free, not because you withdrew "only the taxable part".
ATO rulings & guidance
The strategy is not based on a single ruling that "blesses" it — it operates within the superannuation and tax law. The main ATO materials behind it are:
| Source | What it covers |
|---|---|
| TR 2010/1 | Income tax: superannuation contributions — the meaning of a "contribution", how one is made, and that it is made when the fund receives the money. |
| ATO ID 2015/23 | A member's benefit must be cashed by an actual payment — a journal entry is not enough. Cited for the point that real transactions matter. |
| Contribution caps guidance | The non-concessional cap and bring-forward rules that govern whether the re-contribution stays within cap. |
| Proportioning rule | How the tax-free and taxable components of a benefit are worked out (ITAA 1997 s 307-125). |
| Part IVA commentary | The ATO has indicated a plain-vanilla re-contribution strategy is unlikely to attract Part IVA — though contrived arrangements can still be at risk. |
How we help
We check your condition-of-release status, confirm your non-concessional cap and total-super-balance position, model the death-benefit saving against your actual components, document the withdrawal and re-contribution correctly (especially inside an SMSF), and make sure the strategy is set up alongside your licensed financial adviser — with the beneficiary nomination right so the benefit actually lands where you intend.
Glossary of terms
- Non-concessional contribution
- An after-tax contribution to super for which no deduction is claimed. It adds to the tax-free component. Capped each year (currently $120,000, or up to $360,000 under the bring-forward rule) and can generally be made only up to age 75.
- Condition of release
- An event that lets you legally access your super — such as reaching age 65, or reaching preservation age and retiring. The withdrawal step depends on having met one.
- Death benefits dependant
- For super death-benefit tax: a spouse (or former spouse), a child under 18, a financial dependant, or a person in an interdependency relationship. A benefit paid to them is tax-free; a financially independent adult child is not one.
- Proportioning rule
- A super withdrawal must be drawn from the tax-free and taxable components in the same proportion they make up the interest — you cannot withdraw "only the taxable part". The strategy works because the re-contribution returns as 100% tax-free.
- Excess contributions
- Contributions above your cap. Exceeding the non-concessional cap can trigger excess contributions tax or other consequences, which can undo the benefit of the strategy.
- ATO
- The Australian Taxation Office — the federal agency that administers tax and oversees self-managed super funds.
This factsheet contains general tax information only, summarised from publicly available ATO guidance and the superannuation and tax law. The calculator and examples are simplified illustrations, not a precise calculation, and figures (caps, rates, thresholds) can change. A re-contribution strategy involves a superannuation product and contribution decision and is not automatically tax-free if done incorrectly or above cap limits. It is not personal financial product advice — please work with Kristy Pan & Co. and a licensed financial adviser, and confirm your eligibility, before acting.