As you head into retirement, you may have come across the term “recontribution strategy.” Put simply, it involves withdrawing a lump sum from your super and then putting it straight back in. It may sound unnecessary, but this simple step can have meaningful tax benefits for your children down the track.
The super “death tax” explained
Your super consists of two parts.
- Taxable component: made up of concessional contributions (such as employer contributions and salary sacrifice) and the earnings your super has generated.
- Tax-free component: made up of non-concessional contributions (personal contributions you’ve already paid tax on).
Once you reach 60, withdrawals from super are generally tax-free for you. But the distinction between taxable and tax-free components becomes very important when your super is passed on.
If your spouse or dependent children (under 18) inherit your super, they generally receive it tax-free. Adult children who are not financially dependent, however, usually face a tax of at least 15% (plus Medicare levy if applicable) on the taxable component. Given this is often the largest portion of a super balance, the tax bill can be significant.
How recontribution may help
By withdrawing from your super and recontributing it as a non-concessional contribution, you may be able to convert part of the taxable component into a tax-free component.
This could mean that when your adult children receive your super death benefit, the tax bill is far lower — or even eliminated.
Key points to keep in mind
- This strategy is generally available once you’ve reached preservation age and before you turn 75.
- Annual contribution caps and balance limits still apply, so it’s important to plan carefully.
- Your accumulation account must still be open in order to recontribute.
- Superannuation and tax are complex on their own, and combining them requires careful planning to avoid mistakes.
For many families, a recontribution strategy can be a way of ensuring more of their hard-earned savings go to their loved ones, not the tax office. But as with any financial decision, the right approach depends on your personal circumstances.
Note: This article was originally published on Advisely with the title “The super strategy to spare your kids the dreaded death tax” on 14 August 2025.
Thinking about a recontribution strategy?
At Halpin Wealth, our advisers can help you assess whether this approach makes sense for your situation. We’ll guide you through the rules, contribution caps and timing, so you can make informed decisions with confidence.
Book a no-cost, no-obligation conversation today and let us help you make the most of your super for the next generation.
This information provided in this article is general advice only and has been prepared without taking into account your own objectives, financial situation or needs. Before making a financial decision based on this advice, you must consider whether it is appropriate in light of your own needs, objectives, and financial circumstances, and where relevant, obtain personal financial, taxation or legal advice. Where a financial product has been mentioned, you should obtain and read a copy of the Product Disclosure Statement (PDS) prior to making any decisions about whether to acquire a product.