What is a re-contribution strategy?


A re-contribution strategy is a withdrawal of your superannuation benefits and a re-contribution back into super.

Superannuation benefits are categorised into tax-free and taxable components depending on how the original contributions were made into the fund. Lump sum withdrawals from superannuation must be made in accordance with the proportioning rules, that is, proportionate amounts drawn from taxable and tax-free components. There is no tax payable on tax-free components.

A re-contribution strategy involves withdrawing a lump sum after a condition of release is met, paying any necessary tax on the withdrawal and re-contributing these funds into superannuation as a non-concessional contribution. The revised superannuation balance will potentially consist of all, or more, tax-free component.


Why implement a re-contribution strategy?

A great reason to implement a re-contribution strategy is tax; this strategy converts all or part of the taxable portion of your superannuation benefit into a tax-free component. Ultimately, this may result in a reduction of the potential tax payable if your super is passed onto certain beneficiaries following your death.

This strategy can only be implemented if you are able to meet a condition of release to access your superannuation benefits and also eligible to make a contribution into superannuation.

The strategy is especially effective under the estate planning perspective. This strategy can also be utilised where there is some likelihood that your superannuation benefits will be received by those not considered to be dependants under taxation law, such as adult children. A re-contribution can reduce the lump sum tax payable from death benefit proceeds, or in some cases, the adult beneficiaries will not be required to pay any tax at all (see table of tax rates below).

The following table illustrates the tax rates applicable when superannuation death benefits are paid as a lump sum.

Tax dependent

e.g. a spouse, children under 18, someone financially dependent on the deceased person

  • Tax-free Superannuation component has no tax payable
  • Taxable (taxed and untaxed elements) Superannuation component has no tax payable


Non-tax dependant

e.g. children 18 and over

  • Tax-free Superannuation component has no tax payable
  • Taxable (taxed element) Superannuation component has up to 17%in tax treatment
  • Taxable (untaxed element) Superannuation component has up to 32%in tax treatment

1 includes Medicare levy of 2 percent. Where the benefit is paid through your deceased estate, the executor or administrator of your estate pays the tax and Medicare levy is not payable.


Case study

Anne is 62 and has fully retired from work at the age of 61. She has $400,000 in her super fund with $200,000 tax-free and $200,000 taxable component. Assuming she is eligible to withdraw her superannuation balance, and her total superannuation balance last 30 June was less than $1.48 million, she could proportionally withdraw $330,000 from her superannuation as follows:

Tax components Tax implications
$165,000 tax-free component (50%) Tax-free
$165,000 taxable component (50%) Tax-free up to $230,000 of taxable component (low-rate cap for 2022/23)
$330,000 total super Nil tax payable


As Anne is eligible to re-contribute the full $330,000 into super, her revised superannuation balance will consist of 91.25 per cent tax-free component, rather than the original 50 per cent, as follows:

  Tax-free component Taxable component
Initial superannuation balance $200,000 $200,000
Withdrawal $165,000 $165,000
Balance in fund $35,000 $35,000
Add re-contributed amount $300,000 $0
Balance after re-contribution $365,000 $35,000


Re-contribution may be more beneficial if you are aged between 60 and 65 as superannuation benefits are tax-free (regardless of the tax components). You can then make a non-concessional contribution up to $110,000 per annum (2022/23) or up to $330,000 as per the bring forward rule, averaged over a three-year period whilst you are under age 67 (subject to your total superannuation balance last 30 June).


Things to consider

Whilst the re-contribution strategy has numerous advantages and potential tax-benefits, there are also some disadvantages that investors should be aware of.

  • Transaction costs such as buy/sell spreads may apply while transferring the funds.
  • By implementing this strategy, your assessable and taxable income may increase for a particular financial year. A higher assessable income and taxable income may lead you to pay more tax, reduce tax offsets, Medicare levy or reduce some Family Assistance from Centrelink.
  • You may be liable to pay tax for the withdrawal from superannuation if you are aged below 60 and depending on the components of your superannuation.
  • Re-re-contributing, any amount that is in excess of a specified limit, the non-concessional cap, will incur a penalty tax.
  • To maximise your contributions, investors can consider making contributions over two financial years. Where they can make the regular maximum non-concessional contribution of $110,000 in the first year, and in the following year can harness the bring forward rule to make a second contribution of $330,000.


Looking for a reliable financial advisor can seem overwhelming, but getting started doesn’t have to be. EPG Wealth is a self-licenced, boutique financial planning firm that is here to help. If you would like to improve your current investment strategies or are looking to start your investment journey, click here to organise a complimentary 20-minute phone call with an EPG Wealth adviser.

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