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We used to be able to make non concessional contribution by withdrawing amounts from the fund and re-contributing the same amount – is this still allowed?
Thank you.
A: Thanks for the question.
If you mean the “withdrawal and re-contribution” strategy, yes – this is still allowed subject to the following important caveats:
a) you must have met a ‘condition of release’ to withdraw your super – for example, aged 65; aged 60 or over and ceasing an employment arrangement; aged 55 or over and permanently retired;
b) any re-contribution back into your fund is subject to the non-concessional limit – $150,000 this year, $180,000 in 14/15..
The purpose of the strategy is to change the proportion of your “tax free” and “taxable” components, and serves two purposes:
a) can reduce the tax payable on a withdrawal (pension or lump sum) between age 55 and 60;
b) can reduce the tax payable by a “non-dependant” on your death.
Read this article for an example.
