How a recontribution strategy could reduce tax for your loved ones
Explore the potential tax benefits, limitations and considerations to see whether a recontribution strategy may be suitable for you.
25 September 2026
Once you retire, you still have choices about what you do with the super you’ve built up – including what you may eventually leave to your beneficiaries, the people you care about.
Who receives your super can make a significant difference to how it’s taxed. If your super death benefit goes to someone considered a dependant for tax purposes – such as your spouse or de facto partner – it can generally be paid as a tax-free lump sum.
However, the situation may be different if you leave your super to someone who isn’t considered a tax dependant. A common example is a financially independent adult child.
Depending on your circumstances, a recontribution strategy may help reduce the tax paid by these beneficiaries. It involves withdrawing money from super and putting some or all of it back as an after-tax contribution.
The rules can be complex and there are different ways to structure the strategy. As it will not be suitable or beneficial for everyone, it’s important to get financial advice before making any changes. A financial adviser can help determine whether a recontribution strategy may suit you and how it could be structured based on your circumstances.
This article provides a simple explanation of how a recontribution strategy works and some of the key things to consider.
Why your super components matter
Your super will generally have two components – a tax-free component and a taxable component.
When a lump-sum death benefit is paid to someone who isn’t considered a dependant for tax purposes, the tax-free component remains tax free. However, the taxable component may be taxed.
The mix of taxable and tax-free components in your account can therefore affect how much tax some beneficiaries may pay.
How does a recontribution strategy work?
The basic idea is fairly simple: withdraw money from super, then put some or all of it back as an after-tax contribution.
When you withdraw money, it will generally contain taxable and tax-free components in the same proportions as your account. You generally can’t choose to withdraw only the taxable component.
However, when the money is put back into super as an after-tax contribution, it generally becomes part of the tax-free component.
It may sound like you’re going around in circles, but the purpose is to change the mix of your super. If the same amount is withdrawn and recontributed, your overall balance may be similar, while the taxable component may decrease and the tax-free component may increase.
In turn, some beneficiaries may pay less tax when they eventually receive your super death benefit.
A simple example
Let's say you have $300,000 in super – $240,000 is taxable component and $60,000 is tax-free component. That means your super is 80% taxable and 20% tax free.
If you withdraw $100,000, you generally can't choose to withdraw $100,000 from the taxable component. Because your withdrawal reflects the same proportions as your account, it would generally include $80,000 of taxable component and $20,000 of tax-free component.
If you're eligible to recontribute the full $100,000 as an after-tax contribution, that amount generally goes back into super as tax-free component.
Your total super balance would still be around $300,000, but its make-up would have changed. You would now have around $160,000 of taxable component and $140,000 of tax-free component.
That's the potential benefit of recontributing: you haven't added more money to your super, but you've increased the amount that's tax free. And that could reduce the tax some loved ones pay when they eventually receive your super, depending on the circumstances and applicable tax rules at the time.
Note: This is a simplified example and doesn't take into account investment earnings, fees, tax or changes in value while the money is outside super.
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Rules for withdrawing and recontributing
There are two sides to a recontribution strategy: you need to be eligible to take money out of super and eligible to put it back in.
You may be able to access your super if you've reached preservation age and met a condition of release, such as retiring. Once you're 65, you can generally access your super even if you're still working. Find out more about accessing your super.
There are also rules about making contributions, including age limits. Generally, super funds can accept voluntary personal contributions until shortly after you turn 75, although different rules can apply to some types of contributions.
Find out more about restrictions on voluntary contributions.
Together, these rules can create a window when you’re able to access your super and still contribute money back into it.
Limits also apply to how much you can contribute. Money you withdraw and put back as an after-tax contribution generally counts towards your non-concessional contributions cap.
Depending on your circumstances, you may be able to use the bring-forward rules. These may allow you to make a larger after-tax contribution by bringing forward some of your future contribution caps.
Find out more about contribution caps.
How much you can contribute can depend on factors including your age, your total super balance and contributions you've already made.
The rules and limits can change, so it’s important to get financial advice and confirm how much you’re eligible to contribute before taking money out of super, as you may not be able to put the intended amount back in.
Think about the bigger picture
Reducing potential tax for your loved ones may be worthwhile, but it needs to be considered alongside your own retirement needs.
Moving money out of super and back in can also have other consequences, including implications for your contribution and transfer balance caps, tax on earnings and eligibility to make future contributions. For example, if you take money from a retirement income account and recontribute it to an accumulation account, the investment earnings on that money may be taxed differently.
There may also be a period when your money is not invested while the withdrawal and recontribution are processed. If markets move during this time, you could miss out on investment gains or reinvest at a different price.
Your overall super balance, retirement income, investments and estate planning needs should therefore be considered before you act.
Getting the right advice
While the basic idea is simple, there are many different ways a recontribution strategy can be set up. The rules and potential tax consequences may differ from person to person, so it is important to get financial advice first.
A financial adviser can help you understand whether a recontribution strategy may be suitable for your circumstances, how much you may be able to recontribute and the potential impact on your retirement savings and your beneficiaries.
Brighter Super’s team of financial advisers and super specialists can help you understand your options and make informed choices about your super in retirement.
Find out more about Brighter Super’s financial advice services – you can book an appointment online or by calling us on (07) 2111 9325.
The information contained is up to date at the time of publishing. Some of the information may change following its release. Any questions can be referred to Brighter Super by calling 1800 444 396, or by emailing info@brightersuper.com.au.
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This article provides general advice only and does not take into account your individual objectives, financial situation or needs. As such, you should consider whether it is appropriate in light of your own objectives, financial situation and needs prior to making any decision. You should consult a licensed financial adviser if you require advice which takes into account your personal financial circumstances.
