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Worried you’re missing part of your refund? Remember, the low and middle income tax offset isn’t a refund on its own – it’s used to offset (or reduce) the amount of tax you pay. The offset amount you may be entitled to is automatically applied and could range between $255-$1080, depending on things like your taxable income and how much tax you’ve paid.
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FHSS & Tax relief

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Newbie

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Replies 4

My understanding is that with the First Home Super Saver scheme, FHSS withdrawals are not counted as taxable income for calculating Family Tax Benefit entitlements.  

Is this also applicable when calculating 2018-19 tax relief? ie, if I withdrew the FHSS amount during the 2018-19 financial year, would this be counted as taxable income when making tax relief calculations, thus reducing the amount of tax relief I would receive?

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Most helpful response

ATO Certified Response

Community Moderator

Replies 0

Hi @Ballum

 

Welcome to our Community.

 

You have correctly identified that your assessable first home super saver (FHSS) released amount is not included in your assessable income for calculating family assistance and child support payments.

 

There are a few other examples of where it isn't included such as:

 

While it doesn't form part of your assessable income, it does still form part of your taxable income. In turn, the assessable FHSS released amount will be subject to tax at your marginal tax rate (minus a 30% tax offset) as well as the Medicare levy (but not the MLS).

 

When you mention 2018-19 tax relief, it is assumed that you are referring to the low and middle income tax offset. If so, because this offset is worked out on your taxable income, the assessable FHSS released amount is included when working out the offset.

 

For more information, check out the low and middle income earners page on our website. The examples at the bottom of the page demonstrate how much the low and middle income tax offset would be depending on the taxable income.

 

While the assessable FHSS released amount is included when working out the low and middle income tax offset, it won't necessarily reduce it. In fact, depending on how much your taxable income is, it may increase the offset, decrease the offset or make no difference at all.

 

Using the examples from our website, check out what the low and middle income offset would be if each person's taxable income was increased by $30,000 due to an assessable FHSS released amount:

 

Example 1: Jacqueline

  • Previous Taxable income: $18,000. Previous low and middle income tax offset: $255.
  • New taxable income: $48,000. New low and middle income tax offset: $1080.

 

Example 2: Jeff

  • Previous taxable income: $45,000. Previous low and middle income tax offset: $855.
  • New taxable income: $75,000. New low and middle income tax offset: $1080.

 

Example 3: Anita

  • Previous taxable income: $50,000. Previous low and middle income tax offset: $1080.
  • New taxable income: $80,000. New low and middle income tax offset: $1080.

 

Example 4: Andre

  • Previous taxable income: $92,000. Previous low and middle income tax offset: $1020.
  • New taxable income: $122,000. New low and middle income tax offset: $120.

 

The first two examples demonstrate how adding the assessable FHSS released amount actually increases the low and middle income tax offset. The third example demonstrates how it doesn't make a difference while the fourth example demonstrates a decrease.

 

Hope this helps.

 

Thanks,

 

ChrisR

4 REPLIES 4

Taxicorn

Replies 3

FHSS withdrawals are included in your taxable income.

 

They are taxed at your marginal tax rate less a 30% tax offset.

 

Not sure why you believe they are not used for Family Tax Benefit as they would use your taxable income.

 

 

Newbie

Replies 2

From ATO website -

 

‘Your assessable FHSS released amount is not included in your assessable income for calculating family assistance and child support payments. These amounts were included in prior years, so this will prevent double counting.’

 

 

Taxicorn

Replies 0

@Ballum 

 

Thanks for pointing that out.

Most helpful response

ATO Certified Response

Community Moderator

Replies 0

Hi @Ballum

 

Welcome to our Community.

 

You have correctly identified that your assessable first home super saver (FHSS) released amount is not included in your assessable income for calculating family assistance and child support payments.

 

There are a few other examples of where it isn't included such as:

 

While it doesn't form part of your assessable income, it does still form part of your taxable income. In turn, the assessable FHSS released amount will be subject to tax at your marginal tax rate (minus a 30% tax offset) as well as the Medicare levy (but not the MLS).

 

When you mention 2018-19 tax relief, it is assumed that you are referring to the low and middle income tax offset. If so, because this offset is worked out on your taxable income, the assessable FHSS released amount is included when working out the offset.

 

For more information, check out the low and middle income earners page on our website. The examples at the bottom of the page demonstrate how much the low and middle income tax offset would be depending on the taxable income.

 

While the assessable FHSS released amount is included when working out the low and middle income tax offset, it won't necessarily reduce it. In fact, depending on how much your taxable income is, it may increase the offset, decrease the offset or make no difference at all.

 

Using the examples from our website, check out what the low and middle income offset would be if each person's taxable income was increased by $30,000 due to an assessable FHSS released amount:

 

Example 1: Jacqueline

  • Previous Taxable income: $18,000. Previous low and middle income tax offset: $255.
  • New taxable income: $48,000. New low and middle income tax offset: $1080.

 

Example 2: Jeff

  • Previous taxable income: $45,000. Previous low and middle income tax offset: $855.
  • New taxable income: $75,000. New low and middle income tax offset: $1080.

 

Example 3: Anita

  • Previous taxable income: $50,000. Previous low and middle income tax offset: $1080.
  • New taxable income: $80,000. New low and middle income tax offset: $1080.

 

Example 4: Andre

  • Previous taxable income: $92,000. Previous low and middle income tax offset: $1020.
  • New taxable income: $122,000. New low and middle income tax offset: $120.

 

The first two examples demonstrate how adding the assessable FHSS released amount actually increases the low and middle income tax offset. The third example demonstrates how it doesn't make a difference while the fourth example demonstrates a decrease.

 

Hope this helps.

 

Thanks,

 

ChrisR