Question 3

Nikita has reached her preservation of 58 and has decided to retire. She has $400,000 in her superannuation account; tax-free $40,000, balance from a taxed source. Nikita has heard that if she withdraws $100,000 and re-contributes the funds withdrawn back into her super this could benefit her non-dependent daughter in terms of minimising tax relative to a future death benefit.

1. Explain to Nikita how a re-contribution strategy works.
2. Discuss the tax consequences of Nikita withdrawing $100,000 from her super.
3. Calculate the taxable proportions of Nikitas super when the $100,000 is recontributed.
4. Calculate the potential tax savings for Nikitas non-dependent daughter.