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FHSS Concessional Contributions

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Hi ATO Team,

My partner and I are thinking of using the FHSS scheme to save for a house deposit. We are aware you can contribute a max of $15,000 per year and $30,000 max for individuals ($60,000 for couples). We are looking to buy in the next 2-3 years.

The ATO states "you can withdraw 100% of your non concessional (after tax) amounts, and 85% of concessional amounts (pre tax)."

We were thinking of each salary sacrifcing $288 each week through our employer. ($288 x 52 = $15,000) My question is, why can you only withdraw 85% of concessional amounts? It doesn't make sense to me.

If we were to contribute $30k each using salary sacrifice and save the full $60k over the next 2 years. Does that mean we can only withdraw $51,000 when we want to purchase our home? (85% of 60'000 = 51,000)

If so, what's the benefit of using this scheme? I understand you also receive "associated earnings" when you withdraw, is there any way to work this out? And is it capped at $30k per individual with the associated earnings included? Or do you get those on top of the $30k?

Thanks team,
Aaron
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Hi @aaronsemmler

 

Your understanding is correct. The first home super saver (FHSS) scheme rules allow you to withdraw 100% of your eligible non-concessional contributions and 85% of your eligible concessional contributions.

 

For more information about the first home super saver scheme and the contributions you can withdraw, go to our website.

 

You can only withdraw 85% of your eligible concessional contributions because these contributions are usually taxed at 15% in your super fund. This means that your calculation is correct as $30,000 minus 15% equals $25,500. With your partner, the combined amount is $51,000.

 

When you request your FHSS determination and provide us with your contributions details, we will calculate your maximum release amount which includes your eligible contributions and your associated earnings. The associated earnings are in addition to the maximum $30,000 contribution limit and are worked out using the applicable shortfall interest charge (SIC) rates.

 

Using your scenario, this means that if your associated earnings were calculated to be $1,000, your maximum release amount would be $26,500 ($25,500 plus $1000). Our guidance note GN 2018/1 (which can also be accessed from the FHSS scheme page on our website) provides further guidance about this calculation that you can check out.

 

The FHSS scheme allows first home buyers to take advantage of the tax concessions and the higher rate of earnings that super provides when compared to saving in a more traditional way, e.g. savings account. The following thread provides a helpful example of your potential savings:

 

First Home Super Saver Scheme

 

Good luck with saving for your first home.

1 REPLY 1

Most helpful response

Community Support

Replies 0

Hi @aaronsemmler

 

Your understanding is correct. The first home super saver (FHSS) scheme rules allow you to withdraw 100% of your eligible non-concessional contributions and 85% of your eligible concessional contributions.

 

For more information about the first home super saver scheme and the contributions you can withdraw, go to our website.

 

You can only withdraw 85% of your eligible concessional contributions because these contributions are usually taxed at 15% in your super fund. This means that your calculation is correct as $30,000 minus 15% equals $25,500. With your partner, the combined amount is $51,000.

 

When you request your FHSS determination and provide us with your contributions details, we will calculate your maximum release amount which includes your eligible contributions and your associated earnings. The associated earnings are in addition to the maximum $30,000 contribution limit and are worked out using the applicable shortfall interest charge (SIC) rates.

 

Using your scenario, this means that if your associated earnings were calculated to be $1,000, your maximum release amount would be $26,500 ($25,500 plus $1000). Our guidance note GN 2018/1 (which can also be accessed from the FHSS scheme page on our website) provides further guidance about this calculation that you can check out.

 

The FHSS scheme allows first home buyers to take advantage of the tax concessions and the higher rate of earnings that super provides when compared to saving in a more traditional way, e.g. savings account. The following thread provides a helpful example of your potential savings:

 

First Home Super Saver Scheme

 

Good luck with saving for your first home.