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Re: First Home Super Saver Scheme Release

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Initiate

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Hi there, I am hoping to get some clarity on the releasing of funds in regards to the First Home Super Saver Scheme.

 

When looking to purchase property, it is impossible to know when you will find a house that you want to purchase... it could take a month, or years.

 

So the two options are:

 

1. keep making the contributons into your super and keep the money in your super while you look for a property, however then when you find a property, the ATO will take so long to release your funds (25 business days!!!) that you will lose the house to another buyer.

 

2. wait for your money to be released BEFORE you even start looking for a property, and then all that time you spend looking for a property you havent been using the FHSSS as you have already drawn from your super.

 

This system is very flawed as we have found a property but our funds will not be released in time for the sale, so I will either lose the property if I wait for the funds, or be taxed on the funds withdrawn as the ATO wont consider me a first home buyer if I sign the contract before the funds are released (and therefore at the end of the day have even less saved because I can only draw back 85% of the amount I have contributed).

 

When I have called to speak to the ATO about this scheme to try help me, they just read me the information from the website as though they are reading it for the first time, it seems that no one can really give you any help on your particular circumstances.

 

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Newbie

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I couldn't agree more with what you are saying, I have found it very frustrating trying to speak with the ATO about this. There doesn't appear to be a lot of people with enough knowledge to apply the scheme to each circumstance, as a result my wife and I spent hours on the phone trying to get to the bottom of a couple of issues that arose as a result.

 

I can't fathom why there is a restriction on signing a contract in the period between issuing a release and obtaining the money. It isn't as if you can later decide you don't want the release to be processed.

If you know how much you will get and have a 5 week timeframe in which you will receive the funds, then it doesn't make sense why you can't sign a contract in this time.

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Best answer

Newbie

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I couldn't agree more with what you are saying, I have found it very frustrating trying to speak with the ATO about this. There doesn't appear to be a lot of people with enough knowledge to apply the scheme to each circumstance, as a result my wife and I spent hours on the phone trying to get to the bottom of a couple of issues that arose as a result.

 

I can't fathom why there is a restriction on signing a contract in the period between issuing a release and obtaining the money. It isn't as if you can later decide you don't want the release to be processed.

If you know how much you will get and have a 5 week timeframe in which you will receive the funds, then it doesn't make sense why you can't sign a contract in this time.

Initiate

Replies 1

Hi @erincook

 

Have you found any new information regarding the signing of the contract?

I also believe this system is extremely flawed, as you mention you could take years to purchase a house or you could take 10 minutes. and putting a 25 day time period on the funds being released is not acceptable in my eyes.

I have also potentially found another issue in my circumstance. My pay entered my bank account on 29/08/2018 and i am still waiting for my super contributions to enter my superannuation account before i can submit my Determination, as i want to be able to get my last mays contributions. Today is 05/09/2018 so adding more delays in me potentially being able to sign a contract on a new home.

 

I also find it very disappointing that no one has responded to your questions.

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Devotee

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Hi @erincook

 

Without sounding rude, what "clarity" are you looking for?  It sounds like you've done your research on this topic and understand your options. For those who've determined that the FHSSS is right for them in the first instance, option 2 sounds like a more appropriate way to go for most people, as you'd have the released funds + assoc earnings and have up to 12 months to find your ideal property (I recognise your point about having to withdraw super to do this). 

 

However in your case it sounds like you've already found a property before having the funds released. So you need to decide how badly you want this property. Go for the property now and neutralise te FHSSS (i.e. obtain no benefit) or wait and use the FHSSS after it is released and risk missing out on this particular property.  

 

The ATO administers the process and yes it can take some time, but the timeframes are outlined in advance on the website.

 

Sorry to hear it hasn't worked out for you and I do recognise that it's a frustrating situation........

 

 

 

 

 

 

Initiate

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No further information as the people on the other end of the phone literally can only read the website information back to you, so no point calling them to discuss.

I ended up having my money released to me the day before auction (within 9 business days!) but I know it’s not the case for many as I’ve been chatting on another thread with people still waking past the 25 business days. Either way, I was not going to miss out on a dream house because of it and would have bid without or without the funds and then just cop the tax penalty at the end of it. In the end we didn’t succeed at the auction so I now have the money waiting to be used (although would be better if I was still salary sacrificing and adding to it...). Catch 22!

In regards to funds that your employer has not yet popped into your super, this was also the case with me so I just asked our accountant to pay that difference to me directly (at my normal tax rate) - but it would depend how flexible your employer wants to be... good luck!!!

Initiate

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I just wanted to chat to people in the same situation and see if any of them had further insight... the issue ended up being discussed on the radio, with many people highlighting the same frustrations and luckily for me my money was released early, in a reasonable amount of time (not 25 business days!!).

MVF
Devotee

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@erincook @Grayson @benvdk 

 

For what it is worth, here is a very small insight into what the Federal Governments thinking was on this issue .. which I know a lot of people disagree with ...    

 

1.171 The FHSS Scheme applies a post-release compliance approach to ensure that individuals have access to the amounts that they have saved under the FHSS Scheme before they are required to pay their deposit. This means that instead of requiring individuals to provide evidence that they have entered into a contract prior to amounts being released (which would likely to give rise to substantial timing and liquidity issues), individuals are simply required to purchase their first home within a specified period after amounts are released.

 

Its in here .... https://www.ato.gov.au/law/view/document?docid=NEM/EM201755/NAT/ATO/00003

 

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