Hello Cherry
Thanks for an interesting question.
As a broad proposition, where a fund member passes away their underlying superannuation industry needs to be paid out as a lump sum, or alternatively used to support a death benefits pension for a dependent of the deceased fund member. This should occur “as soon as practical” after the fund member’s death.
The ATO has issued an Interpretative Decision ATO ID 2015/23 indicating that it is NOT possible to give rise a lump sum payment to the surviving fund member and then a recontribution (by way of a non-concessional contribution) through journal entries alone.
This is primarily because in order for a journal entry arrangement to be effective, there needs to be a set off of two mutual legal obligations owed by one party to another.  The problem is that surviving spouse has no legal obligation to make a non-concessional back to the fund. Hence there is nothing to practically set-off against.
Consideration could be given to commencing a death benefits pension for the benefit of the surviving spouse. If this was to occur the fund would need to have access to sufficient cash to make the minimum pension payments.
If this is not possible or desirable, then given the ATO’s views as per ATO ID 2015/23 (as referred to above) a payment of the lump sum in specie and recontribution of the same amount as non-concessional contribution does not “work” and would be considered to be a breach of Regulation 6.17.
The other alterative may be to actually make a genuine in specie transfer of part of the title of the SMSF’s asset property to the wife such that the SMSF and the wife are co-owners of the property. As you refer to, this can generate CGT consequences f(and income tax payable consequences) or the SMSF, assuming that as of when the fund member (husband) died, he was solely in accumulation phase.
Best regards
The Auditors Institute