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Timing of determination request

Newbie

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HI Team,

I am looking to sign a contract of sale on July 8 2021.

Prior to this I intend to make a $15k after tax contribution on June 22 and another $15k after tax contribution on July 1. This is for a total of $30k after tax. I intend to claim these personal contributions in the relevant tax returns.

My understanding is that the sequential order of the FHSS is Contribution made > Determination request > ATO determination response > Sign > at some point the money is deposited into nominated account.

Given this information:

1. Is it neccesary for the super fund to have received a Notice of intent to Claim before the determination request is made?

 

2. If i submit a determination request on 2 July 2021, can i reasonably expect a determination response prior to July 8 2021?

 

3. Given the contributions are already taxed at 37% prior to being deposited into Super. Am i correct in understanding that I will be able to expect the total $30k to be released, while in the aggregated respective tax returns I can claim back the marginal difference in my tax rate and super tax rate (22% & $6600)?

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Most helpful response

ATO Community Support

Replies 0

Hi @FirsthomeWB

 

1. While it isn't necessary for the super fund to have received and acknowledged your notice of intent for your deductions before you do a determination, it's a good idea to. This will prevent you for forgetting to do it before release.

 

2. A determination request is instant. They're instant because you're telling us what you can release, and we're telling you how the tax on those amounts works. We haven't done any checks by the time we give you the determination to tell you what you can release.

 

3. If you claim a deduction for your contributions, that income is no longer taxed. You claim a deduction for that income, which means you no longer pay tax on it. Instead, it is taxed at 15% in your super fund. You can release up to 85% of your concessional contributions (the ones you intend to claim a deduction for) because of the tax paid.

 

When you release your savings, that becomes taxable income to you too. We withhold your estimated marginal tax rate plus Medicare levy surcharge, then give you a 30% tax offset. It means instead of paying 37% tax, you'd end up paying that 15% in the fund on the $30k, and in your example, 9% on the released amount of $25.5k. You would still be entitled to your deduction for your personal contributions you intend to claim a deduction for, though.

 

You can read about the first home super save scheme and claiming deductions for personal super contributions on our website.

1 REPLY 1

Most helpful response

ATO Community Support

Replies 0

Hi @FirsthomeWB

 

1. While it isn't necessary for the super fund to have received and acknowledged your notice of intent for your deductions before you do a determination, it's a good idea to. This will prevent you for forgetting to do it before release.

 

2. A determination request is instant. They're instant because you're telling us what you can release, and we're telling you how the tax on those amounts works. We haven't done any checks by the time we give you the determination to tell you what you can release.

 

3. If you claim a deduction for your contributions, that income is no longer taxed. You claim a deduction for that income, which means you no longer pay tax on it. Instead, it is taxed at 15% in your super fund. You can release up to 85% of your concessional contributions (the ones you intend to claim a deduction for) because of the tax paid.

 

When you release your savings, that becomes taxable income to you too. We withhold your estimated marginal tax rate plus Medicare levy surcharge, then give you a 30% tax offset. It means instead of paying 37% tax, you'd end up paying that 15% in the fund on the $30k, and in your example, 9% on the released amount of $25.5k. You would still be entitled to your deduction for your personal contributions you intend to claim a deduction for, though.

 

You can read about the first home super save scheme and claiming deductions for personal super contributions on our website.