Forum Topics Super/Estate Planning strategy
a month ago

Dear All

As promised in my presentation from a few weeks ago, I’ve outlined a strategy below that might be of interest to some members. If you’re approaching retirement, or maybe recently retired, it’s likely to be more applicable to you.

I apologise in advance, but because there are so many variable to consider, such as your age, your super contribution history, the size of your super account balance, if there are insurances in your fund, if you’re in the pension phase and so on, it’s impossible to give a one size fits all answer. If after reading the strategy, you have some questions, just send me a DM.  

For this reason, this is general advice only and before you act, you should seek further advice from your financial planner or taxation adviser to ensure your personal circumstances are taken into consideration.


The definition of a superannuation dependent is different to a taxation dependent.

If you die, then under the Superannuation laws, your superannuation benefits can be paid to any the following; a spouse, children of any age, financial dependent(s) or your estate.

However, for TAXATION purposes, if you die, the taxation applicable on your super (or pension) account balance depends on a number of factors.

If you have a tax dependent, such as a spouse, a child under 18, a person in an interdependent relationship or a person who was dependent on the deceased (eg a child who is a full time university student), then there is no taxation on the lump sum benefit.

What this means is that if you die and don’t have any taxation dependents’, then it’s highly likely that the ATO will become one of your (unwanted) beneficiaries.


Broadly speaking, there are two types of superannuation contributions.

The most well known are, to use industry jargon, called “Concessional contributions”. These include:

Contributions your employer makes on your behalf (Super guarantee),

Salary sacrifice contributions

Contributions that you’ve claimed a tax deduction

The current cap for these contributions is $27,500 pa.

The lesser known contributions are called, “non-concessional contributions”.

These contributions are typically contributions to super which you have not claimed a tax deduction on, such as funds invested into super from a savings account, inherited funds, proceeds from the sale of an asset, etc.

The current cap for these contributions is $110,000 pa.

Non-concessional contributions are identified in your super account as a non-taxable component (tax free).

Concessional contributions AND super fund earnings are classified as a taxable component.

Some super fund statements will tell you how much taxable and non-taxable you have, but most don’t, so you’ll need to ring your super fund to get the breakdown. If you have an SMSF, these details should be in your annual accounts.

 So let’s say, Jim is a 62 year old, who has just retired. He is single with two adult children. His children are working full time.

He has a superannuation account balance of $600,000 and he’s been advised by his super fund that the taxable component is 100% i.e. $600,000.

He has made a Binding Death Benefit nomination which says that the two adult children receive his super on a 50/50 basis upon his death.

Now if Jim were to “fall off the perch”, because he has no tax dependents, the tax on his death benefit would be 15% (plus Medicare) of his account balance i.e. $90,000 plus Medicare.

His two kids will share $510,000 & the ATO will receive $90,000.

Since he’s retired, Jim could withdraw some of his funds and reinvest those funds as non-concessional contributions. And since he’s over age 60, there is no tax when he withdraws the funds from his super account.

The current non-concessional cap is $110,000, so he could withdraw this amount from his super and then deposit the same amount back into his fund.

And while it simply sounds like he’s just moving the deckchairs around, this relatively simple act, means if he now falls of the perch, the $600,000, as a result of the withdrawal and reinvestment, will be divided as follows:

 his two kids will share $526,500 & the ATO will receive $73,500.

That’s $16,500 more for his kids than if he did nothing.

And he can improve on that.

Jim learns that the ATO will allow you to make 3 years of non concessional contributions in one financial year (known as the bring forward provision). In other words, he could withdraw (3 x $110,000) and then reinvest the funds back into super.

So let’s say it’s late May or early June 2023, instead of just withdrawing $110,000 as in the example above, Jim could withdraw $440,000 from his account.

He deposits $110,000 back into his account THIS financial year, and then on or after, 1st July, deposits the remaining $330,000 into his super account, restoring it to it’s original $600,000.

This action means that now if he fell off the perch, his $600,000 super will be divided as follows:

His two kids will share $576,000 and the ATO will receive $24,000.  

This relatively simple strategy has resulted in a transfer of $66,000 from the ATO to his kids.

Very important – if Jim did take advantage of the bring forward provision and contribute $330,000 non-concessional contributions in July 2023, he should not make any more non-concessional contributions for 2023/24, 2024/25 & 2025/26 financial years.

For couples, there is the scope to make even greater reductions in the taxation liability by using both of their respective superannuation accounts.

Finally, although I only retired last August, the super rules are evolving. You’re welcome to ask me questions, but if you have significant amounts in your super, it’s probably worth paying a good financial adviser a few grand for current advice.

And remember this is not a tax avoidance strategy!

It’s an estate planning strategy.



a month ago

Super helpful stuff @Rocketrod -- thanks for sharing!