NOTE: If the ATO Community has any influence on ATO website updates (examples in GN / TN references noted herein should have my query (1) and (2) clearly explained so clients can better interpret & confirm whether applied to both tax withheld and tax offset in tax return).
I need to fully clarify FHSS implications for my 2025/26 tax return (TR) – ensuring only very minor tax debt due (if any) overall (NO significant debt with new mortgage). During ATO calls, officers only read guide notes and advise it is worked out in your tax. That is not sufficient, I need clear / accurate info, and NO, not seeking financial advice as fees outweigh benefit of FHSS release. Just need clear and accurate clarification, so I can calculate an estimate for my collective tax return, to make an informed decision.
QUERY: I understand FHSS should pre-fill in TR, I check / add details for items (1) and (2) in TR (however note: for (2) I cannot locate where listed – need confirm which Tax offset Tx code this is applied to)?
I read all FHSS guidance, GN 2024/1, GN 2018/1 (latter is visually easier to read), TR 2024/4 and ATO Community posts. The clarification required relates to 30% FHSS Tax Offset. If interpreting correctly, it appears 30% tax offset (or reference to) is applied to both (1) and (2) below:
(1) during calculation of tax withheld on assessable FHSS release amt (i.e. 37% marginal tax rate (MTR) + 2% Medicare Levy (ML) – 30% tax offset = 9% tax withheld) – ATO withholds amt, the FHSS payment summary states both ‘assessable FHSS release’ + ‘tax withheld’ amt’s. Both amt’s are then applied to TR supplementary section #24 Other income cat.3 FHSS + S (tax withheld); plus
(2) a non-refundable (NR) tax offset (30% of the assessable FHSS release amt) is then ALSO applied to TR in Tax offsets (Tx) – cannot locate where (in standard or supplementary sections) or if auto-applied by ATO.
If (1) and (2) are correct above (then EXAMPLE 3 below is correct) – then I only need to know for (2) where Tax offset Tx code is applied.
If (2) not correct, I will have significant tax debt (EXAMPLE 2 below is correct), unless I request ~42% tax withheld (~$8,320 withheld) result ~$173 refund. However, from memory reading, cannot request >17%.
MY FHSS DETERMINATION: completed FHSS Determination (see figures below) for purposes of understanding my examples (rounded):
- Concessional contributions (pre-tax): $14,645.74
- Total associated earnings: $5,165.00
- Estimate max. withholding tax: $3,367.00 (17% of Max. release amt)
- Max. release amt: $19,810.74
- Note – I can determine that:
- ATO is unsure of MTR (last 2 x FYs were lower and 2025/26 FY is higher).
- combined income (incl. FHSS Max. release amt) will be $135k-$190k MTR
- 17% withhold (is highest MTR 45 + 2% ML – 30% = 17% tax withhold)
- whereas my actuals will be (MTR 37 + 2% ML – 30% = 9% tax withhold) – I would retain assumed 17% tax withhold to avoid tax debt (as in my examples).
MY EXAMPLES – Note: projections (income / deductions / health insurance) fairly accurately estimated using various ATO calculators + Moneysmart Income tax calculator 2025/26. My estimate (debt / refund) does have variance compared to ATO Income tax estimator (ITE) (likely health insurance). I have NO Commonwealth debts or other to apply.
Example 1: 2025/26 Tax estimate (NO FHSS)
Normal FY figures (excluding any FHSS)
Income gross: $133,666
Interest: $3,518
Total gross income: $137,184 (Gross + Interest)
Deductions: $1,319
Taxable Income: $135,866 (Total gross less Deductions)
Tax on Tax. Income: $31,608
Medicare Levy: $2,717
Tax on TI + ML: $34,325
Tax withheld: $33,904
EST. debt/refund: ~$421 DEBT due (mine) vs ~$742 DEBT due (ATO ITE)
Example 2: 2025/26 Tax estimate (FHSS with (1) FHSS tax withheld only)
Includes FHSS tax withheld amt only, No NR Tax offset)
Income gross: $133,666
FHSS (max. release): $19,811
Interest: $3,518
Total gross income: $156,995 (Gross + FHSS + Interest)
Deductions: $1,319
Taxable Income: $155,676 (Total gross less Deductions)
Tax on Tax. Income: $38,938
Medicare Levy: $3,114
Tax on TI + ML: $42,052
Tax withheld: $33,904
FHSS Tax withheld: $3,368
EST. debt/refund: ~$4,780 DEBT due (mine) vs ~$5,429 DEBT due (ATO ITE)
Example 3: 2025/26 Tax estimate (FHSS with (1) FHSS tax withheld + (2) 30% NR Tax offset)
Includes FHSS tax withheld amt + 30% NR tax offset amt (FHSS (max. release amt $19,811 x 30% = $5,943 offset). For ATO ITE calculator purposes, inserted amt$ at either super income stream or refundable offset (same result).
For figures below (deducting the FHSS 30% tax offset at tax amount on taxable income) – gave me a refund vs the ATO ITE calculator.
Income gross: $133,666
FHSS (max. release): $19,811
Interest: $3,518
Total gross income: $156,995 (Gross + FHSS + Interest)
Deductions: $1,319
Taxable Income: $155,676 (Total gross less Deductions)
Tax on Tax. Income: $32,995 (Amt Tax. On TI $38,938 minus FHSS 30% tax offset $5,943)
Medicare Levy: $3,114
Tax on TI + ML: $36,108
Tax withheld: $33,904
FHSS Tax withheld: $3,368
EST. debt/refund: ~$1,164 REFUND due (mine) vs ~$513.88 DEBT due (ATO ITE)
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