Q: My wife turns 60 this financial year and it has always been my intention to cash out her portion of our small self-managed super fund (SMSF) and re-contribute it straight back in, so as to ensure that when she and I pass away, our children are not hit by tax. Is that still a valid strategy and if so, am I correct in thinking that I may have missed out on the opportunity because the maximum bring forward amount was reduced from $540,000 to some other number since1 July, 2017?
A: For the benefit of other readers, I will first explain the potential tax bill that you are referring to in your question.
Tax-free component is… tax-free
Background: Super benefits can be made up of two components: tax-free component and taxable component. The tax-free component is always tax-free irrespective of the age that you take your super benefits, and irrespective of whether you leave your benefits (after you die) to individuals who are treated as dependants, or non-dependants under the tax laws.