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Re: How to calculate the withdraw tax from the example in first home saver scheeme?

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Michelle earns $60,000 a year and wants to buy her first home. Using salary sacrifice, she annually directs $10,000 of pre-tax income into her superannuation account, increasing her balance by $8,500 after the contributions tax has been paid by her fund. After three years, she is able to withdraw $27,380 of contributions and deemed earnings on those contributions. Her withdrawal is taxed at her marginal rate (including Medicare levy) less a 30 per cent offset. After paying $1,620 of withdrawal tax she has $25,760 that she can use for her deposit.

 

 

I don't understand how 1620 is reached?  can any one show me step by step?

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Hi @baron33,

 

Welcome to our Community!

 

Michelle earns $60,000, but has salary sacrificed $10,000 of this, leaving $50,000 taxable income for the year. She has withdrawn $27,380, which is included in her taxable income. Her total taxable income in this year is $77,380. Personal income tax on that amount, based on current marginal rates, is $16,695. The Medicare Levy on that amount, in that year (bearing in mind she has saved for three years so the rate will be 2.5%) is $1,934. Total tax is $18,629. She gets an offset of 30% of the withdrawal amount ($8,214), bringing her tax bill down to $10,415.
 
If Michelle hadn’t withdrawn the amount in that year, her taxable income would’ve been $50,000. She would pay personal income tax of $7,797, Medicare Levy of $1,250, there would be no FHSSS withdrawal offset, she would receive a low-income tax offset of $250, leaving her with a total tax bill $8,797.
 
The difference between these two numbers is the amount of tax Michelle is paying on the FHSSS withdrawal: $1,618. (The figures have been rounded throughout.)

 

If you have further questions, you can phone us on 13 10 20 between 8am - 6pm, Monday to Friday to speak with an operator.

 

Thanks, JodieH.

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Hi @baron33,

 

Welcome to our Community!

 

Michelle earns $60,000, but has salary sacrificed $10,000 of this, leaving $50,000 taxable income for the year. She has withdrawn $27,380, which is included in her taxable income. Her total taxable income in this year is $77,380. Personal income tax on that amount, based on current marginal rates, is $16,695. The Medicare Levy on that amount, in that year (bearing in mind she has saved for three years so the rate will be 2.5%) is $1,934. Total tax is $18,629. She gets an offset of 30% of the withdrawal amount ($8,214), bringing her tax bill down to $10,415.
 
If Michelle hadn’t withdrawn the amount in that year, her taxable income would’ve been $50,000. She would pay personal income tax of $7,797, Medicare Levy of $1,250, there would be no FHSSS withdrawal offset, she would receive a low-income tax offset of $250, leaving her with a total tax bill $8,797.
 
The difference between these two numbers is the amount of tax Michelle is paying on the FHSSS withdrawal: $1,618. (The figures have been rounded throughout.)

 

If you have further questions, you can phone us on 13 10 20 between 8am - 6pm, Monday to Friday to speak with an operator.

 

Thanks, JodieH.

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@JodieH

 

Thanks Jodie

 

Could you show me the process for this:

 

 She gets an offset of 30% of the withdrawal amount ($8,214), bringing her tax bill down to $10,415.

 

Just wonder how 8214 is calculated?

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@JodieH

 

Also for this

 

If Michelle hadn’t withdrawn the amount in that year, her taxable income would’ve been $50,000. She would pay personal income tax of $7,797, Medicare Levy of $1,250,

 

I think you mean, if she hadn't taken the money -- the taxable income should only be 50000?

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@JodieH

 

Hi 

 

another question for withdraw super (non-concessional contributions) in FHSS.

 

Becasue my non-concessional contributions has been taxed -- then i contribute, saying $100 into my super.

 

My salary taxable income is 70,000 -- when I take the 100 in FHSS, will it be taxed again?

 

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Hi @baron33,

 

Thanks for reaching out!

 

The 30% offset is calculated on the withdrawal amount e.g Michelle's withdrawal amount is $27,380 multiplied by 30% = $8,214 (27380 * 0.30 =8214).  Total tax amount owing is $18,629 - $8,214 = $10,415.

 

Any non-concessional contributions you may make towards the FHSS scheme will not be taxed again when withdrawing the amount. Any earnings on the non-concessional contributions will be subject to tax. 

 

You can find more information about the FHSS on our website.

 

Thanks, JodieH.

 

 

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I have a related question. How have you calculated the interest earned and savings made in that same example?

 

Assuming there was no interest earnt, Michelle would have $25,500 benefit. Given the $27,380 the interest looks to be $1,880.

 

I wasn't sure how you calculated the interest (inc. whether it was compounded), with your assumptions of SIC at 4.78%/annum and interest on savings at 2.0%/annum.

 

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Considering the medicare levy wasn't revised as was originally proposed, will you be updating the example and estimator to account for the medicare levy of 2.0 % rather than the one used (2.5 %)?

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Hi @christopher2813,

 

Thanks for posting.

 

We asked our technical experts about this.  They advised this was based on an example published on a fact sheet prior to the law being drafted.  It was based on certain assumptions that were incorrect and therefore ended up being removed from that content.

 

So the example wasn’t applicable under the final law.

 

Thanks, NicM.