No-Brainer Retirement Contribution

In Australia, between the ages of 60 and 67 and you are retired, you can make concessional retirement contributions even if you aren't working at all. Why would you want to do that?

A concessional contribution is one you can deduct from your income on your tax return. However, the superannuation fund does have to pay 15% tax on the contribution. If your marginal income tax rate is in the 16% bracket–18% including the Medicare Levy–or above, you will save on total tax paid. For example, if you have a paid-off investment property, you might be earning $30k a year in rent. If you make a $12k contribution to super, you will wipe out your income tax bill. Obviously, this saves a lot more tax if you are in a higher income tax bracket.

Now here is the no-brainer bit. As you are retired, if you want, you can turn around the next day and take the money out of super again! 

Maybe you need the money. But even if you don't need it now, unless you stop your existing tax free pension account and start a new one, which is a hassle, earnings will be taxed at 15% in super, vs. the 0% rate you have engineered outside super. If you've already hit the transfer balance cap, then you won't be able to make your tax free pension account any bigger.

Assuming I retire later this year, I am planning to make a concessional retirement contribution to top my concessional contributions for the year up to $30k. As I will probably be in the 30% tax bracket this tax year, the savings will be worthwhile. But I probably won't take it out again, unless I have already hit the transfer balance cap.