This is a process where, when you meet a condition of release, you withdraw money from super and then re-contribute it back in as a personal non-deductible contribution (subject to restrictions with non-concessional caps). This process is used to increase the tax free portion of your super fund benefit. With the introduction of a $1.6 million Transfer Balance Cap for the commencement of tax-free pensions per person, this might be a valuable strategy for couples that have one spouse over and one under the $1.6 million threshold.
This provides the key benefits of providing a more tax effective income stream (if taken prior to age 60) as well as decreasing the tax paid on your death if your benefits are paid to a non-dependant for tax purposes.
This strategy must be planned carefully as:
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