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Signed a contract just before applying for FHSS release

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Initiate

Replies 3

Thank you @Anonymous. Appreciate the responses

 

I won't get charged the FHSS anymore because I just lost the house I wanted.

 

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Anonymous

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@Tin  no problems .. I was prepared to assist if they had charged you ... hope you get your house soon .... good luck ...

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Initiate

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Your help was greatly appreciated nonetheless!
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Anonymous

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Thanks ........                             

 

If there is anything else just come back to the forum, there are at two of us here that don't mind assisting from a non-ATO perspective...  unfortunately the ATO responses on here are usually prepared copy and paste and only from ATO view... 

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Anonymous

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@Tin @erincook

 

Here is the governments supposed reasoning for their approach on this---

 

 " 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. "

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Initiate

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Yup, however that means you need to have the money released before you even start looking for a place....and then if you dont find a place quickly you would have been better off keeping the money in your super and adding to your savings... its a catch 22 in my eyes: keep saving it in there as long as you can but then when you find your dream place they dont release it in time for contracting, or take it out early and not use the scheme to its full potential. In the end its more trouble than its worth. I understand there would be some waiting time.. but 25 business days is the longest I have ever seen... its over a month!

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Anonymous

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@Tin @erincook

 

Here is a way to avoid paying the tax, but you may not like what has to be done ...  It is in a Law Companion Ruling LCR 2018/5   https://www.ato.gov.au/law/view/document?docid=COG/LCR20185/NAT/ATO/00001

 

You will need to read it to get a grasp of what has to be done ...

 

Quote -- 

 

  1. Where the requirements referred to in paragraph 26 of this Ruling are not satisfied because you entered into a contract to purchase or construct a residential premises before the FHSS released amount was released, you must make non-concessional contributions as referred to in paragraph 28 of this Ruling in order to avoid being subject to the FHSS tax. 

 

 

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Initiate

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Hi guys, 

 

Does the fact that I've entered into a contract to purchase an off the plan property have any implications? In theory I don't hold a "freehold interest" in the property as it can be cancelled by the vendor at any time withint the stipulated time frame.

 

I really don't want to pay this FHSS tax I feel like I've been so wrongly punished 

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Anonymous

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@Tin

 

This is not going to be enough, as any contract can theoretically fall through before it settles ..

 

Just wait until you get the determination, then let us know if they have taxed you and take it from there....  

 

If they do tax you it won't be easy to get the FHSS tax remitted but its also not impossible ... it will depend on how you approach the issue, your arguments and how far your prepared to take it ... 

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Anonymous

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As I said before you won't get far with the "off the plan argument" as they have covered that as well .. here it is ...

 

1.178 The time at which the relevant type of contract is entered into is an appropriate event for satisfying the requirement, as it is from this time that legally binding obligations about the purchase or construction are created. It also resolves the timing issues that would be associated with 'off the plan' property purchases which may take years to complete.

 

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

 

but do not give up .... as I said you don't have the determination yet ... and if they do not apply the FHSS tax I would not be putting it on here I would keep quiet about it and move on .....

 

If they do apply the FHSS tax then let us know ....