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_etree28(Newbie)Newbie
20 May 2021

Hello,

I find the information on the FHSSS quite confusing so I hope this helps.

My partner and I are saving for our first home at the moment and are hoping to boost our deposit using the FHSSS. We already have a deposit figure saved and are looking to buy in the next few months so we would be hoping to make the maximum $15,000 non-concessional contribution into each of our funds for the 20/21 FY and again in July for the 21/22 FY to reach the maximum of $30,000 each over the next 2 months.

My questions in regard to this are:

  1. If we were to contribute $30,000 as non-concession contribution, how much would our savings increase by if we are currently in the $45,001 – $120,000 tax bracket given it is a non-concessional contribution?
  2. Do FHSSS contributions reduce our annual income? I freelance as a sole trader on top of my regular employment, which was heightened during COVID when it was my sole income. As this income has not yet been taxed then could the FHSSS help to reduce my annual income for FY20/21 and therefore reduce the tax I will owe OR increase my tax return refund for FY20/21? Say I earned $15,000 as a freelancer this FY (including JobKeeper payments as a sole trader), does that mean if I made a $15,000 contribution to the FHSSS will this reduce my annual earnings by that amount?
  3. How long does it take to withdraw your money once it is in your super? Given the fast-moving property market at the moment is it a seamless process to withdraw funds?
  4. Is there anything else I should know using the FHSSS for non-concessional contributions like this? There seem to be a lot of steps involved and clauses that I fear by using this 'benefit' my money will somehow get trapped in my super account...

Thanks

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1,348 views
1 replies

Most helpful response

Most helpful reply

BlakeATO(Community Support)Community Support
21 May 2021

Hi @etree28

Non-concessional contributions are after-tax contributions. This means it won't make a difference at all to your taxable income with these contributions. While in the fund, they will accrue associated earnings (calculated on the contributions using the 90-day Bank Bill rate plus three percentage points), so it may be more beneficial than sitting in a standard savings account.

FHSS contributions can reduce your taxable income - if they are made as concessional contributions (pre-tax contributions). Concessional contributions are taxed at 15% in the fund. To make personal contributions (non-concessional contributions) turn into an allowable deduction (and therefore a concessional contribution), you'll need to give your super fund a notice of intent. They will then withhold 15% tax from those contributions, and give you acknowledgement. You can then claim a deduction for this contribution, reducing your taxable income. You can nominate the exact amount you wish to claim as a deduction - it doesn't need to be the full amount. Keep in mind that concessional contributions caps mean you may exceed your cap if you claim the full amount.

Once you request release of your funds, it generally takes between 15 and 25 business days. But once you have your savings released, you have 12 months to sign a contract for your home. We can give you an additional 12 months if you need it, too.

Purchasing your first home is a huge endeavor. We can't give you advice on the best steps to take for your financial position, either. Given this, we recommend speaking to a financial advisor about the best choice for you. :)

You can read more on our website:

FHSS

Types of non-concessional contributions

Concessional contributions cap

Types of concessional contributions

Claiming a deduction for personal contributions

All replies

Most helpful reply

BlakeATO(Community Support)Community Support
21 May 2021

Hi @etree28

Non-concessional contributions are after-tax contributions. This means it won't make a difference at all to your taxable income with these contributions. While in the fund, they will accrue associated earnings (calculated on the contributions using the 90-day Bank Bill rate plus three percentage points), so it may be more beneficial than sitting in a standard savings account.

FHSS contributions can reduce your taxable income - if they are made as concessional contributions (pre-tax contributions). Concessional contributions are taxed at 15% in the fund. To make personal contributions (non-concessional contributions) turn into an allowable deduction (and therefore a concessional contribution), you'll need to give your super fund a notice of intent. They will then withhold 15% tax from those contributions, and give you acknowledgement. You can then claim a deduction for this contribution, reducing your taxable income. You can nominate the exact amount you wish to claim as a deduction - it doesn't need to be the full amount. Keep in mind that concessional contributions caps mean you may exceed your cap if you claim the full amount.

Once you request release of your funds, it generally takes between 15 and 25 business days. But once you have your savings released, you have 12 months to sign a contract for your home. We can give you an additional 12 months if you need it, too.

Purchasing your first home is a huge endeavor. We can't give you advice on the best steps to take for your financial position, either. Given this, we recommend speaking to a financial advisor about the best choice for you. :)

You can read more on our website:

FHSS

Types of non-concessional contributions

Concessional contributions cap

Types of concessional contributions

Claiming a deduction for personal contributions

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