Super Reforms – Recontribution Strategy
The ability of a member to withdraw from their taxable component and recontribute as a non-concessional contribution, thereby converting to tax exempt component, is still available now that the lifetime NCC limit proposal has been abandoned. The timing of the strategy, after this financial year has become more important.
Appreciating that any member who could take advantage of this strategy would do so this year we shall consider a member who is able to utilise the 3 year bring forward provision in the 2019/20 financial year. If they were marginally under the $1.6m cap – say $1.55 – they may withdraw $300k on 30 June 2019 and recontribute it to their account on 1 July 2019. Straddling the end of the financial year will influence the ability to recontribute. By reducing the 30 June member balance sufficiently, the ability to make the non-concessional contribution in the next year is created.