First Home Super Saver Scheme @ ATO

7effect on 31/12/2019 - 11:08

Moved to Forum: Original Link

It’s becoming harder to fulfil the great Australian dream of owning your own home, and in response to this affordability issue the federal government introduced a new scheme - the First Home Super Saver Scheme.

What is the First Home Super Saver Scheme (FHSSS)?
The FHSSS provides first time home owners the option of putting some of their super towards a home deposit through voluntary super contributions, either pre-tax (salary sacrifice) or after tax contributions. A single home buyer can make voluntary contributions of up to $15,000 per year, up to a maximum of $30,000. For a couple both individuals can take advantage and together can contribute up to a maximum of $60,000, all with the intent of withdrawing it to use for a deposit on their first home.

Who is eligible?
At a minimum you must be 18 years of age and never owned a property in Australia. This includes an investment or commercial property, a lease of land or a company title interest in land in Australia. For a full list of eligibility criteria please refer to the ATO website. However, if you have previously owned property you may be eligible if the Commissioner of Taxation determines that you’ve suffered a financial hardship.

When can I start?
Contributions made from 1 July 2017 will be eligible for the FHSSS with withdrawals allowed from 1 July 2018 onwards.

What about contribution caps?
Contributions will be subject to the concessional contribution cap of $25,000, so it’s worth keeping track of your super balance.

How do I take the money out?
To withdraw the money from your super fund, you need to apply to the Australian Taxation Office (ATO). If you’re eligible, the ATO will determine how much you can withdraw and arrange for the money to be released from your super fund. Your concessional contribution and earnings that are withdrawn will be taxed at your marginal rate with a 30% offset.

What kind of home can I buy?
FHSSS applies to a residential property that can be occupied as a residence, or vacant land that you plan to build on, but the land must be capable of being occupied as a residence. You will not be able to use it buy a houseboat or motor home.

Do I have to live there?
Yes. To avoid the money being used to buy an investment property you must move in as soon as practical and live there for at least six months out of the following 12 months.

How long do I have to buy a home?
You’ll have 12 months after withdrawing the money to sign a contract. Depending on the situation, there is the possibility of a 12-month extension.

What if I don’t end up buying a home?
If you don’t end up buying a home within the 12-month timeframe, you must either re-contribute the released amount back into superannuation, or pay a tax penalty equal to 20% of the amount released from super.

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Comments

  • teacherer on 31/12/2019 - 11:12

    Used this last week, wish i contributed more tax free the last 2 years. Takes 15-25 business days to come out. Taxed (or something, i forget) at 4.5%

    • 7effect on 31/12/2019 - 11:14

      Yeah only just stumbled across this via a ozbargain forum post. I think having it published as an actual deal should allow more people to find out about it. Its a pretty useful scheme.

    • hamole on 31/12/2019 - 11:59

      The tax on the way out depends on your marginal tax rate. It's your marginal tax rate -30%

      • Flintz on 31/12/2019 - 12:02

        would you know if this is based on your last tax return income?

        • hamole on 31/12/2019 - 12:05

          It will be based on your estimated marginal rate for the current year, then when you lodge your tax return they will adjust and increasing/decrease your liability accordingly.

    • Bargaingeek on 31/12/2019 - 12:10

      Isn’t super taxes at 15% ? Not 4.5%?

    • tebbybabes on 31/12/2019 - 12:14

      I read a scare piece a few weeks ago that was saying something along the lines of while this scheme is helpful, sometimes the lag period between being able to access the funds to actually buy the property can get longer than expected.

  • spuderump on 31/12/2019 - 11:17

    I must admit I only read it for a few mins, it seems quite complex with all the tax issues etc. Is it relatively easy to use?

    • teacherer on 31/12/2019 - 11:18

      Working for gov my contributions went in automatically, took 2 seconds to withdraw it on mygov

  • [Deactivated] on 31/12/2019 - 11:18
    +52

    the year is 2075, ATO introduces the First Home Longevity Scheme. To access the scheme, you must be over 18 years old and agree to contribute your super for the next 75 years. Your grandchildren will be able to use the money as a deposit for a home in outskirts of Sydney/Melbourne. Purchase of houseboats and motor homes are eligible and encouraged due to rising sea levels

  • sssboi on 31/12/2019 - 11:19
    -3

    I'm a first home owner and Ive had my place for two years, would it be possible to use my super to pay off some of my mortgage? Or even to let it sit in the offset account?

    • mbck on 31/12/2019 - 11:23
      +1

      The idea of this scheme is to allow people (first home buyers) to take a foot into the property market. To be exact, to have a home.

      • chyawala on 31/12/2019 - 11:48
        +1

        Some speculate the idea of the scheme is to artificially prop up real estate prices with the banks and real estate industry in bed with the gov. Just look where the money is, the banks here are the most profitable in the world, and it's likely where most of the money you will ever make will go.

    • rake on 31/12/2019 - 11:24
      +3

      that scheme is likely to come when the market crashes

      • pyramid on 31/12/2019 - 11:52
        +1

        keep waiting for crash…

        • rake on 31/12/2019 - 11:59

          I am not waiting on it mate.. We bought this year (Finally!).. but I know a few who are.

          Was just telling the OP that it would only make sense for ATO to consider "rescuing" people who have mortgaged beyond their means to withdraw from Super.

          • 4agte on 31/12/2019 - 12:16

            @rake: Why should the ATO and community do that? A person's primary home doesn't count towards their pension. Why should I pay for their pension with my taxes because they used all their super to buy a home?

            • rake on 31/12/2019 - 15:28

              @4agte: Well, ATO shouldn't. But does not necessarily they wouldn't. Once it becomes a hot political issue, everything goes.

  • BugsBunnyAUS on 31/12/2019 - 11:22
    +1

    It is a good scheme, I will be taking advantage of it once I am more aware of how much tax I will be paying this year to maximise contributions, and not exceed.

    I have read that concessional contributions include Superannuation Guarantee contributions from your employer - is this correct? If so, if you had SG contributions of $15,000 from your employer, for example, the maximum you would think to contribute in to your super as a voluntary contribution under the FHSS would be $10,000 for that tax year?

    • mbck on 31/12/2019 - 11:24
      +1

      Thats correct.

      See here

      • suchcha on 31/12/2019 - 11:56
        +2

        That's correct. But from this year onwards you can carry forward unused contribution caps from previous years. So if your contributions were lower than 25k in last financial year, you can contribute the unused portion this financial year.

  • Gazpacho on 31/12/2019 - 11:27
    -1

    Can't use this if you just bought a home a few months ago right?

  • ellave on 31/12/2019 - 11:29

    Anyone know if people that have been through a divorce (and got screwed over, i.e every man) are able to get an exemption?

    • 7effect on 31/12/2019 - 11:34

      Lol! I feel your pain. Although a long shot, check out the 'Financial Hardship Provision'

  • bigbadboogieman on 31/12/2019 - 11:34

    Minimum of 24 month contribution required before you can withdraw??

    • anglais on 31/12/2019 - 12:02

      Not aware of that rule. Do you have a link?

      • BugsBunnyAUS on 31/12/2019 - 12:21

        First I've heard of that too. Any more info would be nice, I'm looking at potentially investing in something toward the end of 2020, so intending to make use of the scheme across 2019-20 and 2020-21 tax years.

        • bigbadboogieman on 31/12/2019 - 12:39

          Couldn't find any reference to the 24 month rule. Guess whatever we heard is incorrect..

          Nevertheless way too much hassle for 30K which won't even be enough for 20% deposit on a one bedroom (birdbox) apartment in Sydney's western suburbs.

          https://www.ato.gov.au/law/view/document?DocID=GDN/GDN20181/…

          If the govt was genuinely interested in helping people get in their own homes they would make things easy and practical. Just feels like doing something for the sake of ticking boxes.

          • BugsBunnyAUS on 31/12/2019 - 13:28

            @bigbadboogieman: I don't think it's that much hassle. It should reduce most people's tax bill by at least a few thousand, and the money can accrue in super which is usually a good place to invest as it (should be) diversified.

          • netjock on 31/12/2019 - 17:08

            @bigbadboogieman:

            Block-quote If the govt was genuinely interested in helping people get in their own homes they would make things easy and practical. Just feels like doing something for the sake of ticking boxes.

            Government just likes to rob your future today for a poorer tomorrow.

            Politicians only help their mates… the ones that make personal contributions or political donations. Year after year it is small business that is the biggest employers in the country and they get not that much while ATO has sweet deals with large multi nations transferring all their profits offshore. Just read Michael West, investigative journalist.

    • blueyez on 02/01/2020 - 13:09
      +1

      Nope, I work in super - you are just limited to putting an extra $15k super each financial year. It can sit in your super account for longer than 24 months or less if you wish.

      Essentially once you've made your contributions into your super, you then go apply via the ATO to release it when you are ready.

  • Wildesy on 31/12/2019 - 11:35
    +23

    How is this a deal? It's a government scheme (a pretty underwhelming one at that) that's been in place for over two years. You stumbled across it in the forums because that's where it belongs.

      • Wildesy on 31/12/2019 - 11:42
        +7

        Right, except I'm not even 30 and unlike you, I knew about and utilised the scheme 2 and a half years ago when it when released…

      • IdBuyThat4aDollar on 31/12/2019 - 11:46
        -2

        ok renter

    • wiipantz on 31/12/2019 - 11:42
      +10

      Cannot agree more. The First Home Saver Account was far Superior (THANKS VERY MUCH TONY PERONI!)
      However the poster reckons he missed it thinks the need for a post is somewhat valid in the deals. It's not it belongs in the forums I believe.

    • jaypee06 on 31/12/2019 - 11:52
      +5

      Yeah I can't remember where but someone did the maths and the net benefit was something like 5k, and the downside is your money is essentially locked into super. Also some people were saying it normalises accessing super for other purposes and before you know it they'll be allowing everyone to use all their super to prop up the current prices.

    • sauce2k on 31/12/2019 - 11:59
      -2

      Lol why do you sound so offended?

    • b0b0 on 31/12/2019 - 12:43

      I think it's a deal for people who are not aware.. Not everyone's cup of tea to read into information about super.. My wife is definitely not across this, and I know many more (mainly female friend) who are not aware if this.

      You can't please everyone but thanks OP for the reminder..!

  • alexis2837 on 31/12/2019 - 11:43

    Thanks for the post, I wish I was aware of this couple of years before.

    Few questions-
    1. Can I contribute a lump sum of say, $10k assuming my employer’s contribution for the Financial year is $15k? Or it has to be in instalments every month?

    1. After doing this, let’s say I contribute another $10k at the start of next Financial year 2020-21 (say July 2020). Can I withdraw the $20k I invested in total in, say, October 2020?

    2. Would there be any tax deduction at all when I withdraw? (Assume in the tax bracket paying 32%)

    • Htu08 on 31/12/2019 - 11:49

      https://www.ato.gov.au/Individuals/Tax-Return/2019/Supplemen…

      I believe this will help you out if you want to do a personal not RESC contribution through employer.

      RESC can be found here: https://www.ato.gov.au/Business/Super-for-employers/In-detai…

      Not Tax/Financial advice

    • blueyez on 02/01/2020 - 13:14
      +1

      Yes to all of your questions. For the first one - it's up to you whether you want to do a lump sum or installments, but if you're putting money in before tax just be careful of the $25k cap.

      However, there is a new piece of legislation that lets you rollover your unused cap provided you meet the relevant conditions;

      https://www.ato.gov.au/rates/key-superannuation-rates-and-th…

      Unused concessional cap carry forward

      From 1 July 2018 if you have a total superannuation balance of less than $500,000 on 30 June of the previous financial year, you may be entitled to contribute more than the general concessional contributions cap and make additional concessional contributions for any unused amounts.

      The first year you will be entitled to carry forward unused amounts is the 2019–20 financial year. Unused amounts are available for a maximum of five years, and after this period will expire.

  • Manny Calavera on 31/12/2019 - 11:45
    +1

    This just in: The ATO will give you money each year if you fill in some fiddly paperwork around July about how much money you made the previous year.

  • punkman on 31/12/2019 - 11:46
    +4

    This and other government grants belong in the forums.

    • Slo20 on 31/12/2019 - 12:03
      +2

      Soon we will see Medicare as a deal.

      • ntt on 31/12/2019 - 13:09

        that's a huge bargain!

    • IdBuyThat4aDollar on 31/12/2019 - 20:40

      Quick! Someone should post the 50% CGT discount. Bargain!

      • AbsX on 01/01/2020 - 14:05

        Dont forget to post the accountants fee down the road? If your tax return is more than their fee,surely that's a bargain too?

  • boku on 31/12/2019 - 11:49
    +1

    Not sure if I calculated correctly, but with all that hassle you only end up saving about 8k maximum based on 37% tax bracket.

  • RADICALIST on 31/12/2019 - 11:49
    +8

    Not a deal

  • serpserpserp on 31/12/2019 - 11:52
    +4

    What was the original price?

  • whooah1979 on 31/12/2019 - 11:53
    +2

    What was the price before the deal?

  • Lucille Bluth on 31/12/2019 - 11:54
    +1

    This has been around for years not sure why it is being posted here as a deal. Belongs in the forums

  • demiurge on 31/12/2019 - 11:55
    +3

    How is this a deal?

  • putshan on 31/12/2019 - 11:58
    +1

    Did this for a year and was told by my financial adviser that there are far better ways to save for a home, my friend who is a CA also advised against it.

    There is A LOT of paperwork and fiddling around when trying to withdraw as you have to use it within a year of withdrawing, so you need to be sure you'll land a house (some states tend to have majority of homes going to auction which makes this harder).

    You're taxed when withdrawing dependent on your income plus there are withdrawal fees so the actual money saved is a fair bit less.

    Before doing this talk to a financial adviser and get their opinion (perhaps it'll differ to what I'm told).

    Salary sacrificing is a smart thing to do though, I will say that.

    • wiipantz on 31/12/2019 - 12:03

      What advise was administered in rebuttal to the harebrained scheme?

      • putshan on 31/12/2019 - 12:19

        Well he offer a few 'packages'depending on your needs and goals (mix of risk/reward with various investments).

        Basically Index Funds, High interest savings accounts and certain shares/commodities are recommended.

        I already had a lot saved, so for me the FHSSS was not recommended.

        • wiipantz on 31/12/2019 - 14:16

          Sounds pricey

        • Mrgreenz on 23/05/2020 - 11:03

          Sounds like asking your barber of you need a haircut

    • Lastchancetosee on 01/01/2020 - 11:43

      Used this last year. Paperwork was easy, and only three weeks to access money. The main thing is to send in the form on time. I didn't realise I had to do that, so was late. I apologised and was given a warning rather than a fine.

  • 9674784 on 31/12/2019 - 11:59

    Can anyone explain how depositing money into Super (to then withdraw it) is different from keeping that same additional money in your own savings account?

    Or does the government then allow you to withdraw more from your Super then you've voluntarily added?

    Thanks!

    • Raynes on 31/12/2019 - 12:02
      +1

      The money you deposit into your super is taxed at a lower rate than if you put it in your savings account.

    • nomoneynoproblems on 31/12/2019 - 12:05
      +1

      Afaik it's pre tax, therefore you're not being taxed by the time it hits your bank account (traditional saving).

    • tsunamisurfer on 31/12/2019 - 12:07
      +1

      It is taxed at a very low rate in Super.

      If you were to save outside you pay tax at your bracket rate.

    • wiipantz on 31/12/2019 - 12:10
      +1

      pooling with larger assets and in better potential asset classes could yield higher ROI also

  • ChaseTheSun on 31/12/2019 - 11:59
    +1

    Not a deal.

    • wiipantz on 31/12/2019 - 12:04

      What's the math behind that?

      • b0b0 on 31/12/2019 - 12:46

        One can afford a slightly bigger deposit hence slightly bigger repayments and hence pay more interest?

        Lol

        • wiipantz on 31/12/2019 - 14:13

          Thats about as accurate as I see it. Well done :) of course you don't have to borrow what they offer ;)

  • steve84 on 31/12/2019 - 12:02
    +7

    Another ploy by the government to keep the property market inflated and prop up a failing economy. If first home buyers have some patience and don’t FOMO into the market they’ll be able to pickup a place at a much better price when the house of cards collapses.

    • Lucille Bluth on 31/12/2019 - 12:05
      +1

      If first home buyers have some patience and don’t FOMO into the market they’ll be able to pickup a place at a much better price when the house of cards collapses.

      That time already passed. House prices have been surging month on month for best part of the year.

      • steve84 on 31/12/2019 - 12:09
        +3

        They gotta keep it going to counteract the weakness in the economy and make people “feel” richer and spend more. Debt based economy. It’s going to end badly, and those hit hardest will be those that used schemes like this to scrounge enough to service a debt on an orverpriced house. When the bottom falls out of the market they’ll find themselves in huge negative equity in an economy with rising unemployment. Not good

        • Boogerman on 01/01/2020 - 09:29

          Bingo. Steve’s got it.

      • wiipantz on 31/12/2019 - 12:09

        Decade FTFY

        • steve84 on 31/12/2019 - 12:17

          Not sure of your point? House prices been surging for a decade thus cannot possibly go down again?
          Quite the opposite

          • wiipantz on 31/12/2019 - 12:28

            @steve84: Just adding context as a year is only a fraction of the truth. Nothing more nothing less just being accurate

          • Nom on 31/12/2019 - 22:21

            @steve84: Where do you live steve84 ?

            The population of Melbourne is growing by around 100,000 people per year, and they all need somewhere to live. There's massive (and growing !) demand for housing in Melbourne - unless something changes dramatically with regard to population increase, then house prices can't go anywhere but up. That new population are all attending the same auctions and sales as the existing residents…

            • steve84 on 01/01/2020 - 10:43
              +1

              @Nom: If none of the 100,000 can afford to buy, then prices will have to go down

              • Nom on 01/01/2020 - 21:35

                @steve84: Right - and once they've dropped a couple of percent, then enough buyers can afford them again, and the cycle starts up again.
                Now that we're stuck in this mess, something needs to change dramatically to fix it. Until it does, prices can't trend anywhere but up.

      • Boogerman on 01/01/2020 - 09:27

        No, they haven’t. Pockets of cities (typically high end) have gone up
        Core Logic’s indices are coming under a lot of scrutiny. Don’t forget Core Logic is a profit driven private business.

  • RogerLoger on 31/12/2019 - 12:05

    Home prices are governed by the economic principals of supply and demand. Schemes like this do not alter demand. All they do is give people competing to buy a house at the bottom of the market more cash. More people with more cash does little fix affordability if there aren't enough houses. They just spend more to buy the same place.

    Those on the bottom of the economic pile now get to spend their superannuation money on a house they cannot afford. It's a bad scheme and it puts people into a position where they need to dig into their superannuation of get left even further behind.

    Increased supply gives relief. Apparently there are ample empty places, increasing in value due to 'affordability' schemes like this:
    https://www.smh.com.au/politics/federal/census-snapshot-one-…
    https://finance.nine.com.au/personal-finance/sydney-rents-tu…

  • beatsntoons on 31/12/2019 - 12:06
    +1

    Only keeps the property market inflated. Government should get OUT of the market entirely. Schemes like this and investor subsidies should all be removed.

  • Strahany on 31/12/2019 - 12:11

    A terrible scheme framed to help the youth but, in reality, is just an attempt to further prop up the housing market and fill the pockets of those in power and in the same age bracket.

    What’s better than saddling people up with debt in an over-inflated housing market? Using your super for the privilege! Now these young Australians get to look forward to purchasing a home with a mortgage that will greatly exceed the value of the home after a price correction, leaving them stuck in some rubbish outskirts property that will have good road and PT access ‘coming soon’(TM). Then, after a lifetime of paying off this debt, they’ll get told to pull up their bootstraps and keep working since their anaemic super fund won’t support them in the new pension-less Australia.

  • anglais on 31/12/2019 - 12:33
    +3

    Here's my attempt at the calculation. No doubt some factors overlooked so feel free to comment.

    If you contribute the full $25,500 over 2 years ($30K less 15% tax) sitting for 5 years at 10% (ambitious) that's $11,865‬ interest compounded monthly at 8.5% (10% less 15% tax). (This assumes $15K contribution in first year, and $15K in second year, so only earn 4 years interest for second contribution)

    Comparing against somebody in the 32.5% tax rate you would start first year with $20,250 ($30K less 32.5 tax). Interest rate of 6.75% (10% less 3.25% tax) gives you $8,102 interest at the end.

    By my calculation that leaves you with $28,352 if you invest the money yourself, or $36,431 ($37,365‬ less 2.5% tax differential [32.5% marginal rate - 30% tax offset]) if you use FHSS.

    A gain of $8,079 assuming the investment returns are the same.

    Housing crisis aside if these savings are going to be invested in a house either way it seems like a worthwhile scheme.

    • heysi on 31/12/2019 - 15:08

      Maybe worth noting the earnings you can withdraw is calculated at 3.91% PA currently, better than savings rates, but any returns over that would stay in super.

      https://www.ato.gov.au/Individuals/Super/Withdrawing-and-usi…

      Maximum release amount
      The FHSS maximum release amount is the sum of your eligible contributions, taking into account the yearly and total limits, and associated earnings. This amount includes:

      100% of eligible non-concessional contributions
      85% of eligible concessional contributions
      associated earnings calculated on these contributions using a deemed rate of return – this is based on the 90-day Bank Bill rate plus three percentage points (shortfall interest charge rate).

      https://www.ato.gov.au/Rates/Shortfall-interest-charge-(SIC)-rates/

  • MementoMori on 31/12/2019 - 12:46
    +2

    Hey guys, just trying to do some basic maths on this:

    Let's say you earn $120k pa and are therefore paying a top 37% income tax rate (on income above $90k).

    You put $30k into Super, this money is taxed at 15% on the way in (like all Super contributions are), instead of your marginal rate of tax of 37%.
    So you pay $4,500 tax instead of $11,100.

    Then you withdraw the $30k to spend on your house.
    You pay your top marginal tax rate (37% - $11,100) minus 30% on this withdrawal, which is $7,770.

    So, in addition to the $4,500 you already paid on the way in, you've paid a total of $12,270 in tax on this $30k on the way in and out, which is more than what you would have paid if you just took it as income and saved it in the first place.

    What the??

    Are my maths wrong here somewhere?

    • anglais on 31/12/2019 - 13:18
      +3

      The 30% tax offset on withdrawal reduces the tax rate to 7%. So you would pay $2,100 if you withdraw $30K.

  • justtoreply on 31/12/2019 - 14:58
    +1

    I didn't get to post earlier but it seems others are doing the maths now too.

    You're saving less than the marginal tax rate. Which means beast case scenario its worth sub $7500.. and that's if you're in the highest income bracket (ie: don't really need help!)

    Low income earners really get shafted by this stupid scheme.

    It should go die a miserable death so something worthwhile and simple can be done that benefits those who need it

    • netjock on 31/12/2019 - 17:13

      In this country you don't need help if you have $5m of capital. Everyone else needs help. Unless you have all your food & bills paid for this country is expensive, even for people on $100k a year.

  • OzHunterNSW on 01/01/2020 - 09:27
    +1

    It was always just that… a dream.
    They have artificially inflated the price in order to convey a sense of worth.
    The system is designed around a two income family - but you complicate that by pumping out kids etc.
    You are simply a product of modern "paid" slavery.

  • AbsX on 01/01/2020 - 14:02
    +1

    Whats in it for me?

    Basically the maximum you can benefit is $4500 from this scheme. Which is 15% of $30000. Or $9000 if buying as a couple.

    You pay 15% tax when making the initial super concessional deposit. And the maximum tax reduction is 30% when you actually use the money to buy a home.

    • Kris P on 01/01/2020 - 14:52
      +1

      I am doing this and am in my second FY now. I will have completed the max cap of 30K by August 2020 (i.e. a few more instalments/ salary sacrifices in the new FY [2020-21]).
      You are spot on with the 4500/ 9000 calculation. But apart from this saving, the main reason for me to start investing in this scheme was to be able to follow a disciplined savings towards my first home, because if not this, I am sure I would've spent my savings on unnecessary things.
      The growth in the super fund (whatever that may be) is an added bonus.

      • AbsX on 01/01/2020 - 18:15

        Glad its working out for you

  • blueyez on 03/01/2020 - 08:45
    +1

    Most super funds have clear examples of how the scheme works. I don't work for the following super fund but the information in their fact sheet is useful to paint a clearer picture;

    https://firststatesuper.com.au/content/dam/ftc/digital/pdfs/…

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