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FHSS when claiming deduction

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Hi, I am a first home buyer and have $15k savings and earn $85k/year.

After reading information on FHSS, I plan to do the following:
1. Salary sacrifice a weekly amount so that my pre-tax contributions for the FYE 2020 are $15k (total super contributions will also be under the $25k cap).
2. On 1 July 2020 contribute my $15k cash savings (note I am referring to the after-tax savings I already have, which I will invest in the meantime) into my super (total super contributions will also be under the $25k cap for this year), file a Notice of Intent to claim a tax deduction, then claim this as a tax deduction on my tax return for FYE 2021 ("the after tax contribution")

Questions:
1. I am correct that the after-tax contribution of $15,000 will be treated as follows:
A) taxed at 15% within my fund
B) allowable to be withdrawn under the FHSS assuming I otherwise meet the criteria (I am of course referring to the 85% left after the tax plus interest)
c) taxed at my marginal rate less 30% in the year I withdraw it under FHSS
d) claimed as a tax deduction on my tax return for FYE 2021, so my taxable for that year is reduced by $15k

2. Also, if the above is correct, is it also correct that my tax return for FYE 2021 should show my gross income (assume still $85k), a deduction of $15k (therefore taxable income of $70k taxed ordinarily), PLUS the amount of the FHSS withdrawal assuming I do it that year which will be taxed at my marginal rate less 30%?



Thank you in advance for your response.

I also wish to note it is a tremendous shame that the FHSS is so complex that ordinary Australians would not have a chance of understanding it. I have spent about 6 hours researching this to get to my current point of understanding, which I hope is on track.
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ATO Certified Response

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Hi @DG

 

Welcome to our Community.

 

The short answer is that your understanding of the first home super saver (FHSS) scheme is correct.

 

Regarding the taxation of the $15,000 personal contribution that you intend to make in July 2020, your understanding is correct. Your super fund will tax it at 15% after you submit your notice of intent to them as it will then be treated as a concessional contribution.

 

By claiming a $15,000 tax deduction in your 2021 tax return, your taxable income will be reduced by $15,000 for that year. You are correct in saying that if your income was $85,000, your new taxable income would be $70,000.

 

For more information about claiming deductions for personal super contributions, the notice of intent and the effects of claiming a deduction, refer to our website.

 

If you submit a FHSS release request during the 2021 financial year, the assessable FHSS released amount would also need to be declared. That amount would be added to your $70,000 income and be taxed at your marginal tax rate (plus Medicare levy) minus a 30% offset.

 

By making all of the contributions concessional, the contributions component of the FHSS maximum release amount will be less than $30,000 due to only 85% of eligible concessional contributions being included. In saying that, you will be maximising the tax saving due to the 15% concessional tax rate.

 

For more information about the FHSS maximum release amount and the first home super saver scheme in general, you can check out our website.

 

It is acknowledged that the FHSS scheme can be seen as complex. In saying that, super in general can be complex. We recommend that people do what you have done and learn about how the scheme works before making extra contributions, not after.

 

Hope this helps.

 

Thanks,

 

ChrisR

1 REPLY 1

Most helpful response

ATO Certified Response

Community Moderator

Replies 0

Hi @DG

 

Welcome to our Community.

 

The short answer is that your understanding of the first home super saver (FHSS) scheme is correct.

 

Regarding the taxation of the $15,000 personal contribution that you intend to make in July 2020, your understanding is correct. Your super fund will tax it at 15% after you submit your notice of intent to them as it will then be treated as a concessional contribution.

 

By claiming a $15,000 tax deduction in your 2021 tax return, your taxable income will be reduced by $15,000 for that year. You are correct in saying that if your income was $85,000, your new taxable income would be $70,000.

 

For more information about claiming deductions for personal super contributions, the notice of intent and the effects of claiming a deduction, refer to our website.

 

If you submit a FHSS release request during the 2021 financial year, the assessable FHSS released amount would also need to be declared. That amount would be added to your $70,000 income and be taxed at your marginal tax rate (plus Medicare levy) minus a 30% offset.

 

By making all of the contributions concessional, the contributions component of the FHSS maximum release amount will be less than $30,000 due to only 85% of eligible concessional contributions being included. In saying that, you will be maximising the tax saving due to the 15% concessional tax rate.

 

For more information about the FHSS maximum release amount and the first home super saver scheme in general, you can check out our website.

 

It is acknowledged that the FHSS scheme can be seen as complex. In saying that, super in general can be complex. We recommend that people do what you have done and learn about how the scheme works before making extra contributions, not after.

 

Hope this helps.

 

Thanks,

 

ChrisR