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First Home Super Saving Scheme

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If a single person were wanting to save for a first home and was earning $50K a year and wanted to contribute $15K of salary sacrificed contributions for two years, totalling $30K, would this be advisable? I have calculated below what I believe to be the outcome but I am unsure if I am missing something.

 

ie.

With $30K superannuation salary sacrificed contributions (less 15% tax on contributions = $25,500 released)

2019 Taxable Income $35,000

2019 Tax Payable (inc HECS, LITO, LMITO and Medicare Levy) = $3,247

2020 Taxable Income $60,500 ($35,000 + $25,500 release)

2020 Tax Payable (inc HECS, LITO, LMITO and Medicare Levy) = $13,612 less FHSS offset [30% x $25,500 = $7,650] = $5,962

TOTAL Tax paid $9,209

 

Without $30K superannuation salary sacrificed contributions (less 15% tax on contributions = $25,500 released)

2019 Taxable Income $50,000

2019 Tax Payable (inc HECS, LITO, LMITO and Medicare Levy) = $8,017

2020 Taxable Income $50,000

2020 Tax Payable (inc HECS, LITO, LMITO and Medicare Levy) = $8,517

TOTAL Tax paid $16,534

 

This means, that there is a difference of $7,325. Please inform me if there is anything I am missing in my calculations, it seems too good to be true.

 

There are also other concerns with regard to making the contributions.

 

1. Is there a possibility that the tax ruling that allows for the FHSSS will be scrapped. I read that there was a similar scheme back in 2007 (FHSS) that left first home buyers putting money in their super funds and not able to release them. Is there a safeguard against this? Especially as many buyers may be young and not able to access their super for 40 or so years if it does get scrapped.

 

2. Is there anyone in the ATO community that has had an experience with clients that had the same type of scenario. Please message below with your experience.

 

3. There have been concerns from taxpayers that used the scheme that they apply for release of the funds and don't get the release for a few months. Is there a maximum amount of time that people have to wait for the release? Does the 12 month period to buy the house after the release of funds start from the day it is requested or from the day it is released?

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ATO Certified

Moderator

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Hi @ rmwaight 
 
We realise that it’s taken a long time to provide a response, and we apologise for the delay.

 

We don’t provide financial advice here on Community – check out the section on ‘Information is power’ in our Moderation Guidelines.  So we can’t advise whether using the FHSS scheme is the right scheme for you.

 

However,  we can provide some information on the other points you raised:

  • It sounds like you’re referring to the old First home saver account in your first question. This scheme allowed individuals to make contributions into a specific account held with a financial institution – contributions made to this account were subject to a concessional tax rate and could attract a ‘co-contribution’. This scheme was abolished from 1 July 2015.  Some changes to the FHSS legislation have recently been passed into law, however any change to FHSS legislation is the responsibility of the Australian Government – we administer any changes once they’ve received Royal Assent and become law.
  • If you would like specific advice on how we think legislation would apply to your situation, you can write to us for interpretive advice.  You might also choose to hire a registered tax professional for information and advice – you can find agents in your area by searching the Tax Practitioner Board register.
  • In most cases, once you've requested to release your FHSS amounts, it will take between 15 and 25 business days (from the date of your release request) for your fund to release your money to us and for us to pay it to you. The 12 month time frame to sign a contract starts from the day you make a valid FHSS release request.

 

Thanks, NicM.

 

2 REPLIES 2

Moderator

Replies 0

Hi @rmwaight,

 

Welcome to the Community.

 

We've asked our technical experts about this and we'll get back to you as soon as we can.

 

Thanks, NicM.

Best answer

ATO Certified

Moderator

Replies 0

Hi @ rmwaight 
 
We realise that it’s taken a long time to provide a response, and we apologise for the delay.

 

We don’t provide financial advice here on Community – check out the section on ‘Information is power’ in our Moderation Guidelines.  So we can’t advise whether using the FHSS scheme is the right scheme for you.

 

However,  we can provide some information on the other points you raised:

  • It sounds like you’re referring to the old First home saver account in your first question. This scheme allowed individuals to make contributions into a specific account held with a financial institution – contributions made to this account were subject to a concessional tax rate and could attract a ‘co-contribution’. This scheme was abolished from 1 July 2015.  Some changes to the FHSS legislation have recently been passed into law, however any change to FHSS legislation is the responsibility of the Australian Government – we administer any changes once they’ve received Royal Assent and become law.
  • If you would like specific advice on how we think legislation would apply to your situation, you can write to us for interpretive advice.  You might also choose to hire a registered tax professional for information and advice – you can find agents in your area by searching the Tax Practitioner Board register.
  • In most cases, once you've requested to release your FHSS amounts, it will take between 15 and 25 business days (from the date of your release request) for your fund to release your money to us and for us to pay it to you. The 12 month time frame to sign a contract starts from the day you make a valid FHSS release request.

 

Thanks, NicM.

 

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