I am interested in contributing additional money into my super account to take advantage of tax savings and to put towards my first home. Can anyone from experience please let me know how easy it was to access the money? I don't want to put all this money aside and not be able to touch it until I'm 65! Thanks
First Home Super Saver Scheme
Mr Haj on 15/11/2019 - 10:20
Comments
According to that ATO summary, you'll only be able to get
85% of eligible concessional contributions
so looks like you'll win something thanks to the lower tax, but also lose 15% (as in - won't be able to use it to buy your first home). Is that correct?
A concessional contribution is a before tax contribution into super, which is always taxed at 15%
Providing you follow all the rules/conditions etc its very easy to release the funds. All you need to do is lodge a form with your MyGov account.
However, the processing time can take a while and can be pretty stressful waiting for it when you find a place you really like or settlement date is approaching. Id advise to apply to release the funds as early as possible.
Yeah, I accidentally hit release funds and they said I could have the 10k to put towards a house. Still trying to save to the 30k mark.
Interesting I've never heard of this before, not sure I fully understand it, so basically I try to put anywhere up to $15k in my super a year, (with a max of $30k all up).
This gives me a bit more return for my super and a bit more money in super as less is taxed, and once I hit $30k I can pull that out and use that on deposit on the house (plus my own savings)?
Yes, as long as first homeowner and voluntary contributions of 15k within the financial year.
Oh awesome, thanks mate!
It's relatively easy. For me it was a few weeks between applying and having the money available to access.
Need to purchase within 12 months. The amount you get is still taxed (but less than the marginal tax rate).
Thanks heaps. The amount you are taxed is your tax rate minus 30 percent yeah? So most people get charged around 4.5% when they withdraw it and it gets taxed at 15% when deposit money in at the beginning.
Make sure you start the release process at least a month before you sign a sale contract. Otherwise you may pay another 20% tax on the released amount
You can thank the bloody liberals for this botched scheme but it can save you a few grand in tax if you do it right.
Still slightly confused is there a time limit of when you have to withdraw the money? or any time as long as its up to 30k?
edit: I'm not looking to buy a property soon so does that mean theres no point contributing to it?
You can put in up to 30k for the purpose of buying a property. But when you withdraw, you withdraw 30k plus earnings. In other words, if you keep 30k in your super for 10 years and it grows to be 60k, then you can withdraw 60k.
If you wonder why put into super 30k instead of just holding 30k yourself. It all comes down to favorable tax treatment on concessional super contributions and earnings within super. In most cases you end up paying less tax. This means your 30k within super will appreciate faster. Over 10 years, the difference can be huge. So I'd argue, the longer you participate in the scheme, the better. Therefore try to max out 30k as soon as possible even if you are not going to buy for many years to come.
Ah thank you for explaining it, makes a lot more sense now. Had no idea this existed until now!
Best to check with the ATO.
Also keep in mind legislation can change, so maybe if you wait too long the scheme might disappear…
From their website;
The First Home Super Saver Scheme (FHSSS) helps Australians boost their savings for a first home by allowing them to build a deposit inside superannuation, giving them a tax cut. The FHSSS applies to voluntary superannuation contributions made from 1 July 2017. These contributions, along with deemed earnings, can be withdrawn for a home deposit from 1 July 2018. For most people, the FHSSS could boost the savings they can put towards a deposit by at least 30 per cent compared with saving through a standard deposit account.
Am I eligible to use the FHSSS?
You can release funds under the FHSSS if you are 18 or over, have not used the FHSSS before, and have never owned real property in Australia. You will be eligible if you meet all eligibility criteria, even if you plan to purchase with a partner who does not meet the criteria.
How much can I contribute?
You can contribute up to $15,000 a year, and $30,000 in total, under the FHSSS. These contributions must be within existing contribution caps (e.g. the $25,000 per year concessional contributions cap).
Had some clarification from the trustees I work for - there is no limit to the number of years but no one can predict legislation changes.
$15,000 is the limit on voluntary contributions you can make in any one financial year and $30,000 is the total across all years.
Only the money you put in yourself - either before or after tax - are counted towards the scheme and the regular contribution caps in super apply :)
Could you still draw the money back out if for some reason you're not eligible for the scheme? Obviously you'd have to pay more tax on it.
@JIMB0: Generally speaking no - not unless you're of retirement age / over 65
If you're below retirement age, then you'd need to meet a condition of release to access your super, regardless of how the money went into your super account.
@blueyez: I remember reading somewhere that you could draw a voluntary contribution back out if you paid the additional tax. I couldn't find a clear answer.
@JIMB0: Wouldn't recommend adding into your super if you needed the money. FHSSS is designed specifically for a first home deposit. Outside of that it is not easy to gain access to your super if you're under the age of 60.
If you're speaking specifically about FHSSS (the above is general info on taking money out of super) you're better off asking the ATO and reading about the scheme on their website.
Spouse contributions, via splitting as well, cannot be withdrawn fyi.
Only contributions you make yourself.I can clearly see how it can be beneficial with pre-tax contributions, but with after-tax contributions - what's the point if I already paid the full tax?
Earnings are taxed at the Super rate instead of your personal tax rate
Aha, it's just I'll only get the difference after my next tax return, right?
So, basically, I could put 15K into my Super today, and once my fund received it, I can apply to release it but will get the difference between my normal tax rate and "discounted" one after completing tax return?
do I need to apply to ATO first to use the FHSSS? Or can I just make a personal super contribution to my current superfund and then in few years time, when I want to buy my first home apply to release it under FHSSS?
There is no explicit information confirming this T.T
I don't want to contribute and ended up locking the $$$ away until I'm 65…
You contribute first. On the ATO website you will see a list of all the contributions you are eligible to withdraw, and you pick them and make your application from there.
Thank you haemo!
Also guys if my employer does not allow salary sacrifice, can any super that I receive as part of my employment benefit (the legislated 9.5% from my total salary) be withdrawn? or is it exclusively only from salary sacrifice?
Only salary sacrifice (concessional) or your own contribution on top of the mandatory 9.5%
I did it. You can put up to $15,000 per year and $30,000 in total. Make sure it's voluntary concessional contribution.
As far as I know, once you are going to buy your first home, you can apply for release of the funds under the scheme.
I will probably buy my first home early next year. I'm thinking of stacking First Home Super Saver Scheme with First Home Loan Deposit Scheme which allows you to borrow up to 95% without paying LMI. If you buy property for $650,000 or less, you won't be paying stamp duty. All you need is $30,000 for the deposit which can be taken out of your super.
I'd say that's pretty good deal.
Here is good summary of the scheme:
https://www.ato.gov.au/Individuals/Super/Withdrawing-and-usi…