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Re: Signed a contract just before applying for FHSS release

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Initiate

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Replies 31

Hi,

 

I have a predicament I would love some help with.

 

Since the inception of the FHSS, I’ve been putting away money since 1st July 2017 for my first home. I’ve put in $15,000 in FY18 as pre tax contribution via salary sacrificed and some more for FY19 YTD.

 

I managed to find a place I really liked and subsequently signed the contract last week.

 

What I did not know was that I needed to have the FHSS funds released to me before signing the contract. This was an honest mistake and I accept responsibility for not reading the fine print.

 

I do not want to be subject to a FHSS 20% flat tax/penalty as I feel this is very undeserved when I’m just trying to save for my first home.

 

Could you please advise what I need to do, I have signed the contract and just applied to have my funds determined and subsequently released. 


Appreciate your help.

 

1 ACCEPTED SOLUTION

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Best answer

Anonymous

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Legislation is applied equally to everyone, and there are some very good reasons for it.  In your case it was an honest error, however the legislation is still going to be applied in the same manner as for everyone else.

 

You will now have to wait for the FHSS determination before you can do anything, as you do not know the outcome.

 

If you do not agree with the determination then you can lodge an objection

If it comes down to lodging an objection you are going to have to do your research as objections are usually only ever won on grounds of incorrect application of the law, and to that extent you may want to discuss with a good tax agent / accountant.

 

Apart from that there is not much you can do at this point in time.

 

ATO general taxation enquiries 13 28 61

 

31 REPLIES 31
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Best answer

Anonymous

Replies 0

Legislation is applied equally to everyone, and there are some very good reasons for it.  In your case it was an honest error, however the legislation is still going to be applied in the same manner as for everyone else.

 

You will now have to wait for the FHSS determination before you can do anything, as you do not know the outcome.

 

If you do not agree with the determination then you can lodge an objection

If it comes down to lodging an objection you are going to have to do your research as objections are usually only ever won on grounds of incorrect application of the law, and to that extent you may want to discuss with a good tax agent / accountant.

 

Apart from that there is not much you can do at this point in time.

 

ATO general taxation enquiries 13 28 61

 

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Initiate

Replies 21

I am in a similar position... found a house we want to a buy... and then found out it can take up to 25 BUSINESS days to have the money released... by that time we will miss the auction date...and miss out on the house if we want to wait for the money to be released....and even though we asked for it to be realeased weeks before the auction, if you sign before its released you get the tax penalty... so in the long run there was no use in even doing this scheme...

 

The options are:

 

1. make 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 (and can only release funds once).

 

It is a flawed system...and no one at the ATO can give you any information, they just read the website text back to you over the phone as though they are reading it for the first time....

 

Why anything should take 25 business days in crazy!

 

Sorry I am not of any help, but can commiserate!

 

 

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Initiate

Replies 20

Yeah I was so frustrated yesterday because you're right they just read back to me what is on the website. 

 

Anyway what's done is done I however will be appealing and most likely will fail because of the "letter of the law".

 

There was no point for me really in using the FHSS scheme. What would've been better is "Your signing of the contract must not be more than 30 days before your funds is released" to give people a realistic chance. I'm so disappointed.

 

Rant over (I think)

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Replies 19

At the end of the day we would have been better off just putting the money in the bank, because after being taxed 15% within super, only being able to withdraw 85% of the amount you salary sacrificed, plus another 20% tax penalty if you purchase before its released... we are worse off... and it comes with bonus stress.... exactly what you need while making the biggest purchase of your life.

 

I think it would be completely fair if they made it that you just need the money released before settlement date ...so as soon as your offer is accepted, you apply... they can take 25 business days (still baffles me) and then you get your money before settlement.

 

I applied for my $$ to be released on 6th August and my Super fund released it on the 14th August (yesterday) - if the ATO now takes another 18 business days to release it to me... I will be extremely disappointed.

 

Good luck to you, I hope that they dont penalize you!

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Initiate

Replies 1

You're right I didn't need the additional level of stress/disapppointment Smiley Sad

 

Thanks and good luck to you!

 

 

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Anonymous

Replies 0

@Tin  I just realised something ... there may be an remote solution to this .. let me know if your pursuing this ..

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Newbie

Replies 4

Just FYI... I requested a release the16th of July, My super sent the money to the ATO the 1st of August... I am still waiting to receive it... The application still says pending... (At ATO).

 

And tomorrow will be 25 business days since I requested it...

 

Regards

 

Gonzalo

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Initiate

Replies 3

Funny this exact problem was featured on Hack last night.... they are kind of blaming it on the super funds releasing the money but we know that is not the case. I think after all this negative feedback they should still release the money without the tax penalty even after we sign contracts... maybe make the settlement date the cut off so that the system is not extorted.
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Anonymous

Replies 2

what is "Hack" .. is it a website and if so is there a link ... 

 

Im not an ATO employee ...