ATO Community

Re: Depositing into the FHSSS

I'm new

Views 241

Replies 2

Hello

 

I am looking to do non-concessional deposits into my super of $15,000 in May 2021, and then another $15,000 in July 2021.

 

Could I theoretically withdraw $30,000 in August 2021 under the FHSS program?

 

Could I still apply for a FHSS determination without having received my tax returns?

 

Yours sincerely

Keen first home owner

1 ACCEPTED SOLUTION

Accepted Solutions

Most helpful response

Devotee

Replies 1

Hi happybanana92

 

Yes you could apply for $30,000, and yes you could apply for the determination without having lodged your tax return for 2020-21.

 

We receive data on an ongoing basis from super funds and from employers, and will use that data to determine releasable amounts, and how much tax to withhold from any amounts released.

 

My only question is - is it worthwhile putting the $30,000 into super and applying for an FHSS release? The associated earnings amount is only going to be around $200 or so. (ie $30,200 or so will be the releasable amount). You'll save a small amount of tax on the $200 earnings that will be included in your assessable income, but the most you'd be saving is $60. Much easier to keep the money in your bank account, not jump through hoops to put it into a super account then get it back out again.

 

Different story if you were considering claiming a tax deduction for the $30,000 contribution. You'd then only have $25,500 released up-front. Less an additional amount of withheld tax depending on your marginal tax rate, maybe $1,000 or thereabouts. So about $24,500 or so straight away, rather than $30,000 straight away. But when you then lodge your tax returns for 2020-21 and for 2021-22 you'd then receive tax refunds and overall you'd end up with more than $30,000 in total to put towards your house. Just means you'd be waiting a while for the extra money.

 

But otherwise, making non-concessional contributions to super and only leaving the money in the account for a short period of time, doesn't seem worth it to me.

 

I'm an ATO employee voluntarily providing my time here

2 REPLIES 2

Most helpful response

Devotee

Replies 1

Hi happybanana92

 

Yes you could apply for $30,000, and yes you could apply for the determination without having lodged your tax return for 2020-21.

 

We receive data on an ongoing basis from super funds and from employers, and will use that data to determine releasable amounts, and how much tax to withhold from any amounts released.

 

My only question is - is it worthwhile putting the $30,000 into super and applying for an FHSS release? The associated earnings amount is only going to be around $200 or so. (ie $30,200 or so will be the releasable amount). You'll save a small amount of tax on the $200 earnings that will be included in your assessable income, but the most you'd be saving is $60. Much easier to keep the money in your bank account, not jump through hoops to put it into a super account then get it back out again.

 

Different story if you were considering claiming a tax deduction for the $30,000 contribution. You'd then only have $25,500 released up-front. Less an additional amount of withheld tax depending on your marginal tax rate, maybe $1,000 or thereabouts. So about $24,500 or so straight away, rather than $30,000 straight away. But when you then lodge your tax returns for 2020-21 and for 2021-22 you'd then receive tax refunds and overall you'd end up with more than $30,000 in total to put towards your house. Just means you'd be waiting a while for the extra money.

 

But otherwise, making non-concessional contributions to super and only leaving the money in the account for a short period of time, doesn't seem worth it to me.

 

I'm an ATO employee voluntarily providing my time here

Devotee

Replies 0

As an example, if you're earning between $45,000 and $120,000 your marginal tax rate is 34.5% with the medicare levy.

 

Assuming the released amount doesn't put you above the $120,000 threshold, the income tax you'll save in 2020-21 and in 2021-22 for the tax deduction you claim for $15,000 in each year will be 34.5% of $15,000 = $5,175.

 

So you could have a released amount of about $24,500 in August 2021. Then lodge your 2020-21 tax return in September 2021, receive a tax refund of about $5,200. Total towards your house is now $29,700.

 

A year later you lodge your 2021-22 tax return, again claiming a tax deduction for $15,000. Receive another $5,200 refund, put that towards your mortgage. Total is around $35,000.

 

I'm an ATO employee voluntarily providing my time here