Announcements
COVID-19 update: Check out our answers to common questions about JobKeeper payment and early release of super.

ATO Community

Re: FHSS & Non-concessional superannuation contributions

Highlighted

I'm new

Views 1283

Replies 5

Hi,

 

Is this right?

1. Pay full tax on income

2. Make non-concessional contribution of post-tax income to Superannuation

3. Time passes

4. Withdraw funds from superannuation under FHSS

5. That withdrawal is again treated as income and is taxed AGAIN at individual's marginal tax rate less 30 percentage points, which could be 47% including medicare, so taxed at 17%.

 

Is this correct? Is it responsible for the ATO to be promoting this to people who may be making non-concessional contributions? The ATO's FHSS page is not transparent on this aspect. Most people will get double-taxed.

 

Deposit $10,000 in superannuation, get back $8,300 in your pocket.

 

Almost everyone would be better off investing outside of superannuation and paying tax on earnings. Or at very least avoiding making non-concessional contributions that would get sucked into this scheme. But too late if you've already done it...

 

Thanks for clarifying.

1 ACCEPTED SOLUTION

Accepted Solutions
Highlighted

Best answer

ATO Certified

Community Support

Replies 3

Hi @pottsy02,

 

Welcome to the Community.

 

When you withdraw your FHSS amounts, the assessable FHSS released amount is subject to tax and included in your tax return.

 

Your assessable FHSS released amount includes:

  • concessional contributions, and
  • associated earnings on both your concessional and non-concessional contributions.

Your non-concessional contributions aren't subject to tax on withdrawal.

 

So let’s say you contributed $10,000 non-concessional contributions towards the FHSS scheme. For the purposes of this example, we’ll say your associated earnings on your eligible contributions is $1,000.

 

If you withdraw $11,000 from the scheme (your $10,000 non-concessional contribution and $1,000 associated earnings), only $1,000 would be subject to tax and included in your tax return - the $1,000 of associated earnings is your assessable FHSS released amount.

 

Alternatively, let’s say you've made $10,000 in voluntary contributions of which $5,000 is concessional contributions and $5,000 is non-concessional contributions (we’ll use the same associated earnings figure as above).  You request to withdraw $10,250 from the scheme, which is made up of:

  • $5,000 non-concessional (100% of your eligible non-concessional contributions)
  • $4,250 concessional (85% of your eligible concessional contributions), and
  • $1,000 of associated earnings on both you eligible concessional and non-concessional contributions

In this example, your assessable FHSS released amount would be $5,250 – this is the amount that would be subject to tax and included in your return.  This is comprised of your released concessional contributions ($4,250) and associated earnings ($1,000).

 

You can find information about the assessable FHSS released amount on our website.

 

As to whether the FHSS scheme is right for you and your financial situation is a financial decision you need to make after careful consideration.  If you're unsure, you may wish to seek independent financial and tax advice from a registered practitioner. 

 

Thanks, NicM.

5 REPLIES 5
Highlighted

Best answer

ATO Certified

Community Support

Replies 3

Hi @pottsy02,

 

Welcome to the Community.

 

When you withdraw your FHSS amounts, the assessable FHSS released amount is subject to tax and included in your tax return.

 

Your assessable FHSS released amount includes:

  • concessional contributions, and
  • associated earnings on both your concessional and non-concessional contributions.

Your non-concessional contributions aren't subject to tax on withdrawal.

 

So let’s say you contributed $10,000 non-concessional contributions towards the FHSS scheme. For the purposes of this example, we’ll say your associated earnings on your eligible contributions is $1,000.

 

If you withdraw $11,000 from the scheme (your $10,000 non-concessional contribution and $1,000 associated earnings), only $1,000 would be subject to tax and included in your tax return - the $1,000 of associated earnings is your assessable FHSS released amount.

 

Alternatively, let’s say you've made $10,000 in voluntary contributions of which $5,000 is concessional contributions and $5,000 is non-concessional contributions (we’ll use the same associated earnings figure as above).  You request to withdraw $10,250 from the scheme, which is made up of:

  • $5,000 non-concessional (100% of your eligible non-concessional contributions)
  • $4,250 concessional (85% of your eligible concessional contributions), and
  • $1,000 of associated earnings on both you eligible concessional and non-concessional contributions

In this example, your assessable FHSS released amount would be $5,250 – this is the amount that would be subject to tax and included in your return.  This is comprised of your released concessional contributions ($4,250) and associated earnings ($1,000).

 

You can find information about the assessable FHSS released amount on our website.

 

As to whether the FHSS scheme is right for you and your financial situation is a financial decision you need to make after careful consideration.  If you're unsure, you may wish to seek independent financial and tax advice from a registered practitioner. 

 

Thanks, NicM.

I'm new

Replies 1

Hi there,

 

I couldn't completely understand the explanation. Following is my scenario.

 

Since I dont have the salary sacrifice option, I did a non-concessional contribution of $15000 into my super account. Since the $15000 is from my salary, I have already paid the tax on it. Now the super account has deducted around 17% tax on the $15000 contribution. While determining the amount to withdraw under FHSS on ATO website, Maximum release amount is 15201 (inclusive of associated earning of $201). Now, can you please explain me how this scheme is beneficial for me?

 

Thanks & Regards

Mit

Highlighted

Community Manager

Replies 0

Hi @mithunstany,


Thanks for your question.


The FHSS assessable released amount is subject to tax. The assessable FHSS amount is the:

 

  • Concessional contributions and
  • Associated earnings on both concessional and non-concessional FHSS contributions.

The non-concessional are not taxed when released from the fund.

 

Check out our page on First home super saver scheme.


Thanks
KylieS

Highlighted

Initiate

Replies 0

This has not been applied to me!
I triggered an ATO internal investigation, and the outcome is: ATO will tax anything you get out of superannuation. In case of FHSS and non-concessional contributions, once you withdraw, even if it's 100% from concessional contribution, you will be taxed again based on your income for the current financial year.
I've just had a phone call from ATO, they are closing my case with such explaination, no matter I was telling them this is WRONG.
Please someone help me!!!
Last August I've put $15,000 as after-tax money from my bank account, and in December I've requested determination. The result from the online determination was that the max releaseable amount was around $13,000. I've called ATO for explaination, and I've been told that I will get back the missing money via Tax return at the end of the financial year. However, after then applying for release, I have then received less than $11,000 in my bank account.

Highlighted

ATO Certified

Community Support

Replies 0

Hi @Marco85

 

Thanks for your post.

 

We have provided some information to you about your situation in another thread. In case you missed it, you can check out it out here: FHSS Taxed Non-Concessional Amount

 

We will only withhold tax from the assessable FHSS released amount. This amount is your concessional contributions plus associated earnings and is based on the information that you have provided in your FHSS determination request.

 

If your circumstances are different to what you outlined in the other thread, let us know.

 

Hope this helps.

 

Thanks,

 

ChrisR