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_ggoosen(Initiate)Initiate
11 June 2021

I think the answer to this is no, but I wanted to ask and understand anyways.

When considering the FHSSS First Home Super Saver Scheme (https://www.ato.gov.au/individuals/super/withdrawing-and-using-your-super/first-home-super-saver-scheme/)

Are we able to access payments made by our employer on our behalf that are made over and above the required 9.5% minimum.

IE if you have an employer that contributes 12% to super, can you withdraw the additional 2.5% in payments they made as part of the FHSSS.

If the answer to the point above is NO. I wanted to confirm how the scheme works.

If you're looking to buy a home it would be in your best interest to have the payments made into your super as a salary sacrafice so that you can take advantage of the 15% tax rate in super?

Even if you reach the annual max contribution you would only be paying 30% tax on that amount as well, so stil makes sense to contribute via super? Is that correct?

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1,463 views
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Most helpful reply

BlakeATO(Community Support)Community Support
14 June 2021

Hi @ggoosen

Payments eligible for release under FHSS are voluntary payments. If they're non-concessional, they must be made by you.

If the payment is not voluntary, it cannot be eligible. Almost always when an employer makes super guarantee payments above our minimum amount, it is an amount set out by a Fair Work agreement. This means they aren't voluntary contributions.

Concessional contributions that count as voluntary are salary sacrificed payments and personal contributions you can claim as a deduction. It means you must volunteer to make them.

To take advantage of the 15% tax rate, they must be concessional contributions. This means you:

    • salary sacrifice the amounts through your employer from your pre-tax income, or

    • you make contributions from your post-tax income and then complete a notice of intent to claim a deduction.

    If you exceed your concessional contributions cap, the excess will be included in your assessable income. This means whatever your marginal rate is will apply to those contributions. You receive a 15% offset for the tax already paid on these amounts. These excess contributions then become non-concessional contributions.

    Remember that when you elect to release your funds for FHSS, the released amount will be included in your assessable income for that year. When you release your amounts, we will withhold your marginal rate minus a 30% tax offset.

    When you take this into account, it's likely that using the FHSS scheme would be beneficial to you. But buying a house is a huge commitment and there are a lot of variables that go into it. Because of this, we recommend speaking to a financial advisor to work out the best choice for you.

    You can read about FHSS and if you exceed your concessional contributions cap on our website.

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    BlakeATO(Community Support)Community Support
    14 June 2021

    Hi @ggoosen

    Payments eligible for release under FHSS are voluntary payments. If they're non-concessional, they must be made by you.

    If the payment is not voluntary, it cannot be eligible. Almost always when an employer makes super guarantee payments above our minimum amount, it is an amount set out by a Fair Work agreement. This means they aren't voluntary contributions.

    Concessional contributions that count as voluntary are salary sacrificed payments and personal contributions you can claim as a deduction. It means you must volunteer to make them.

    To take advantage of the 15% tax rate, they must be concessional contributions. This means you:

      • salary sacrifice the amounts through your employer from your pre-tax income, or

      • you make contributions from your post-tax income and then complete a notice of intent to claim a deduction.

      If you exceed your concessional contributions cap, the excess will be included in your assessable income. This means whatever your marginal rate is will apply to those contributions. You receive a 15% offset for the tax already paid on these amounts. These excess contributions then become non-concessional contributions.

      Remember that when you elect to release your funds for FHSS, the released amount will be included in your assessable income for that year. When you release your amounts, we will withhold your marginal rate minus a 30% tax offset.

      When you take this into account, it's likely that using the FHSS scheme would be beneficial to you. But buying a house is a huge commitment and there are a lot of variables that go into it. Because of this, we recommend speaking to a financial advisor to work out the best choice for you.

      You can read about FHSS and if you exceed your concessional contributions cap on our website.

      _ggoosen(Initiate)Initiate
      15 June 2021

      Thanks Blake, i think that clarifies a few points.

      - on the point of the additional contributions my employer makes. This is not due to an EBA or any fair work agreement, but rather an incentive to attract new hires. a "Perk" of working for this company. If the deciding factor is if this is voluntary, ie do I have the ability to opt out of this with my company then I would agrue that its voluntary. In doing the calculations, I would say the additional % over a 12 month period woudl be negligable.

      on the second point regarding the tax and concession. In order to reduce complexity in this conversation i will assume that in the scenario we are talking about voluntary pretax contributions that are made into super as a salary sacrafice, which will not exceed the maximum contribution cap.

      In that scenario, am i correct to assume that all pre tax contributions will be subject to the standard 15% super tax.

      At the stage when you look to withdraw the funds (that were sacraficed for this FHSS) you will then need to pay tax on the withdrawl at your marginal tax rate?

      In theory if your marginal tax rate is ~32% when you withdraw the funds, the entiere amount will be added to your assessable income and you will be taxed at your tax rate (minus 15%)

      If that is true? Why would anyone use this scheme? There seems to be no benefit in using it at all? In fact may be a hinderance as most people's concencsional tax rate increases over time?

      Specifically if i had used post tax money to save for a home loan in 2020, i would have paid tax at my concesional tax rate back then.

      If i chose to save that money into FHSS and then withdraw that in 2021 I woudl then be getting taxed at a potentially higher tax rate (if we assume people get increases)

      I may be over simplifying this, but i dont see any benefit in using this?

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