First Home Super Saver (FHSS) Scheme
What is the FHSS scheme?
Since 1 July 2018, first home buyers may be able withdraw some voluntary super contributions and their deemed earnings to use towards a house deposit. This makes saving more tax effective and potentially attracts a higher rate of interest.
Personal contributions up to $30,000 made after 1 July 2017 are counted, with an annual cap of $15,000. Note that contributions must still stay within the existing concessional and non-concessional contribution limits.
The withdrawal amounts will be calculated as:
|(eligible contributions – 15% contributions tax) + Deemed investment earnings – withdrawal tax
Where withdrawal tax = your withdrawal amount x (your individual marginal tax – a 30% tax rebate) and the Deemed investment earnings = 90 day RBA accepted Bill + 3% – from the first day of the month in which an eligible contribution was made until the date the FHSS determination is made by the ATO. For the December 2017 quarter, this was 4.7%.
Each eligible individual (see the criteria below) can use the FHSS so a couple may be able to save up to $60,000 through super.
Who is eligible?
To be eligible for the FHSS, you must
- be at least 18 years old (although contributions made when under 18 may be eligible for release)
- have not previously owned property in Australia (unless you have suffered financial hardship and receive an ATO determination)
- have not previously has FHSS payments
- live in the house as soon as possible
- continue to live in the house for at least six months in the first year of ownership
- have made personal (voluntary) contributions to a super account
- be purchasing an existing home or a vacant block to build on – commercial properties, houseboats, motor homes and investment properties are ineligible.
Note that this scheme is totally separate to the First Home Owners Grant (FHOG) so eligibility for one does not impact on the other.
Any FHSS release amounts that may be counted as income are not included in calculations for any of the following:
- child support
- family tax benefit A and B
- childcare benefit
- Medicare levy surcharge
- spouse contribution offset
- Government co-contributions, HECS/HELP repayments
- Commonwealth Seniors Card
What contributions are eligible?
Contributions made after 1 July 2017 that are personal, salary sacrifice or additional employer contributions can be accessed under FHSS. Note that only 85% of eligible concessional contributions and their associated earnings can be released under the FHSS scheme.
You can utilise contributions you have received tax deductions for, but must submit the notice of intent prior to requesting the FHSS release.
Contributions above the concessional and non-concessional limits, SG contributions, spouse contributions, Government co-contributions, defined benefit contributions and contributions made for you by a third party are excluded from the FHSS.
How can I access the FHSS?
If eligible to withdraw money under FHSS, you need to complete an ATO application.
The ATO will assess your application and eligibility. If approved, the ATO will inform your super fund to pay the amount, less the withdrawal tax, to your nominated bank account. Your fund will obviously only release as much money is in your account so you may be able to withdraw funds from multiple accounts in some circumstances.
Once the withdrawal is made, you have twelve months to sign a contract to purchase or construct a home, plus an additional 28 days to inform the ATO the contract has been signed. Otherwise, you must re-contribute the money withdrawn or pay a 20% tax penalty on the withdrawal amount.
Make some contributions!
Seriously, if you think you may be eligible for the FHSS scheme, you can start making some additional contributions at any time – but be careful of the contribution limits.
If you are unsure of your eligibility or the suitability of the FHSS in your situation, speak to one of our Member Advice Consultants. Our financial advisers can also help you set contributions levels to ensure you maximise the potential benefits of the scheme for your circumstances.
Email: firstname.lastname@example.org | Local call: 1300 128 751 | www.avsuper.com.au