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First Home Owner Super Saver Scheme - Withdrawal and Negative earnings

Newbie

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I am looking to put $30K of my pre tax income over the next 4-6 months into my super as salary sacrifice in the anticipation of applying for the funds to be released under the First Home owner Super Saver Scheme later this year. If the earnings on my super fund during that period are negative, will I be drawing down on my exisiting super fund to make up the volentary contributions? If so, this will have drastic detrimental effect on my super. For example/ Hypothetically (and this is extreme, just to make it clear).

- I have $30K in my super today

- Over the next 4 months I contribute an additional $30K to my super.

- At 6 months, I apply for my voluntary contributions to be released under the super saver scheme.

- The performance of my super during this period has been extremely poor (hypothetical extreme to make a point) that the value of my super is now only say $40K total. 

- In order to access the full FHSS amount ($30K) it now draws down on my compulsary / exisiting super, and my super balance is now $10K, causing irrefultable damage to my super balance, same as if you were to buy shares at a high and sell them at a low, making recovery nearly impossible. 

 

Second question- What happens if I make an application for my funds to be released and then make an offer on a property, but it takes too long for the funds to be released prior to settlement? For example, I make an application for funds to be released, make and offer and recieve a determination, but the funds do not arrive within 5 weeks and I have to settle before I have recieved the funds. I am asking this under two scenarios;

1. I have enough money saved, and the FHSS is additional (ie I have 5% deposit, with FHSS I have 10%) 

2. FHSS is required to meet the purchase price (ie I have 5% deposit, but my combined borrowing power and deposit is just shy) 

 

Please don't say "recommend to have FHSS funds approved and in account before making offer" as this is not what I am asking, I want to know what happens in the above scenario. 

 

1 ACCEPTED SOLUTION

Accepted Solutions

Most helpful response

Community Moderator

Replies 0

Hi @Bronte22

 

Thanks for reaching out to us.

 

Based on your example, if you were to request a FHSS release of $30,000 while your super account balance was $40,000, you would only have $10,000 left in your super account. This is despite having an account balance of $30,000 six months earlier and contributing an additional $30,000. This is one of the risks you take when using the FHSS scheme to save for your first home.

 

If you request a FHSS release but don't need the requested amount to settle your purchase, it won't matter if the money lands in your bank account after settlement date. The FHSS scheme rules don't stipulate how you spend the money. You just need to notify us that you have signed the home purchase contract within 28 days.

 

For more information about your requirements after your savings have been released, have a look at the first home super saver scheme page on our website.

 

Without stating the obvious because you have asked us not to, if you are unable to settle the home purchase without the requested FHSS release amount, you have a few options:

  • Negotiate an extended settlement with the seller. Keep in mind that if they agree you may need to pay a penalty to the seller. Also keep in mind that they may not agree which may cause you some legal issues.
  • Negotiate some additional finance with your lender (or another lender). They may be happy to provide additional funds on the proviso that you repay them when the requested FHSS release amount is deposited into your account.
  • Talk to your solicitor or conveyancer to find out what other options you have.

 

We won't be able to speed it up for your FHSS release request is being processed within the usual time frame of between 15 and 25 business days.

 

Good luck with it all.

 

Thanks, ChrisR

1 REPLY 1

Most helpful response

Community Moderator

Replies 0

Hi @Bronte22

 

Thanks for reaching out to us.

 

Based on your example, if you were to request a FHSS release of $30,000 while your super account balance was $40,000, you would only have $10,000 left in your super account. This is despite having an account balance of $30,000 six months earlier and contributing an additional $30,000. This is one of the risks you take when using the FHSS scheme to save for your first home.

 

If you request a FHSS release but don't need the requested amount to settle your purchase, it won't matter if the money lands in your bank account after settlement date. The FHSS scheme rules don't stipulate how you spend the money. You just need to notify us that you have signed the home purchase contract within 28 days.

 

For more information about your requirements after your savings have been released, have a look at the first home super saver scheme page on our website.

 

Without stating the obvious because you have asked us not to, if you are unable to settle the home purchase without the requested FHSS release amount, you have a few options:

  • Negotiate an extended settlement with the seller. Keep in mind that if they agree you may need to pay a penalty to the seller. Also keep in mind that they may not agree which may cause you some legal issues.
  • Negotiate some additional finance with your lender (or another lender). They may be happy to provide additional funds on the proviso that you repay them when the requested FHSS release amount is deposited into your account.
  • Talk to your solicitor or conveyancer to find out what other options you have.

 

We won't be able to speed it up for your FHSS release request is being processed within the usual time frame of between 15 and 25 business days.

 

Good luck with it all.

 

Thanks, ChrisR