First Home Super Saver Scheme Clarification

ErlichBachman on 17/05/2023 - 11:10
Last edited 17/05/2023 - 11:11

Hi all

I'm quite confused by this scheme and the way it works tax wise after reading up a lot first so thought I would ask here please

I'm in the 37% tax bracket for the 15k so my marginal tax rate with Medicare is 39%

We have money sitting in the bank for a house deposit but looking at how this works to help even more potentially

Am I right that if I bpay from my bank $15k before eofy, and another $15k early next financial year that I would be able to claim a 22% tax refund on that amount for each fin year? 22% being 39% marginal tax rate less 15% super tax rate

And then if we withdraw the 30k in say September if we were to buy a house in the next few months I would be able to withdraw 85% of it, and pay 9% tax on that?

So by my calculations the tax savings would be as follows:

$30k x 22% tax refund (voluntary super contribution) = 6600

30k x 85% = 25.5k can withdraw (as the other 15% was taxed within super)
Tax paid on the 25.5k available to withdraw = 9% = 2295

Total benefit of doing this = 6600 - 2295 = $4305

Essentially by transferring money sitting in the bank to super for this program I would be 4305 better off, is that correct?

Thank you

Financial

Comments

  • Donaldhump on 17/05/2023 - 11:15
    +2

    my opinion don't bother its so overly complicated and by time you do it you may save a few grand, but also have the risk of having money stuck if you don;t buy house, miss dead line etc, yet another government balls up of making shit so complicated.

    wouldn't it be simpler just to allow first home owners a tax concession on savings for a few years or limited $

    • vr0ssi46 on 17/05/2023 - 11:54

      He ain't wrong….

    • Drakesy on 17/05/2023 - 12:18

      On paper it's an instant saving of 20% of tax.
      Don't see the problem with that.
      Mind you house prices are still effed.

      • Donaldhump on 17/05/2023 - 15:42

        i think when you withdraw it if your tax bracket is over 30% you then have to pay over that back so that reduced it, combined with the cluster f… of phone calls I had to make to actually ask where the hell the money was, it was stuck in the "system" for 6 months, then they gave the wrong amount, all the headache of doing things in the right order, and having a certain deadlines to do stuff by. i think in the end my wife saved 2.5k and the headache was a nightmare. I would rather forego it. If the gov cant implement a simple (profanity) savings scheme, then god help the country.

        I love money, I would not bother doing this again for 2.5k.

  • lolz112 on 17/05/2023 - 12:07
    +1

    In principal it looks like but the mechanism for it.

    Deposit 15k into your super fund (non concessional super contribution)
    Fill in intent to claim form before 2022/2023 FY tax return -> Changes the 15k into a concessional super contribution - Tax is charged in the super environment (15k *0.85), your income drops by 15% your PAYG tax should have paid 39% on it already.

    End of FY

    Lodge tax return to get 39% benefit.

    Repeat of depositing 15k. I think you will need to fill in intent to claim before you purchase - charged 15% in super environment.

    Apply for FHSS determination and release.

    Purchase property

    Get money out, pay tax on the withdraw

    End of 2023/24 financial year - Tax return to receive income reduction on the 15k.

    Note you should check everything here.

  • suchcha on 17/05/2023 - 12:10

    We did exactly the same. If you are a half of a couple you can double the benifit. So effectively 9k for few hours of paperwork.

  • xabiso on 17/05/2023 - 12:13
    +2

    The examples here might be helpful.
    https://www.ato.gov.au/law/view/document?DocID=GDN/GDN20181/…

    If you put in $15k before EOFY 22/23, that non-concessional contribution can be claimed as a superannuation contribution tax deduction, essentially lowering your taxable income by $15k. Instead of paying 37% + 2% Medicare levy on $15k (assuming you didn't drop brackets), you'll be paying $0 that FY on that $15K during tax time instead of $3.3K. You can put that into an ETF or an interest saving account to grow your wealth further.

    Notify your fund before you lodge your 22/23 tax return. They will turn the $15k into concessional contributions and a 15% tax on the $15K would apply in super then.

    You are right in saying that you can only take out 85% of that $15K once it becomes a concessional contribution.

    You can also release additional "associated earnings" calculated periodically using the quarterly published 90-day Bank Bill Rate + 3%. You'll get the total releasable amount when you apply for a "Determination".

    The true benefit really depends on your tax bracket when you apply for the funds to be released. Released funds are considered assessable income for that financial year but a 30% deduction can be applied to FHSSS withdrawals. You are essentially paying 15% (in super) + the gap ie 7% + 2% Medicare levy in your case unless your bracket gets bumped up when you withdraw up to $50k.

    As for the $15k next FY that you have yet to claim a deduction, you only get the benefit of its gains being taxed at 15% instead of 37%+2% Medicare levy outside of super.

    Like you, I feel like I'm getting $2.3-2.5K in overall benefits for each $15K non-concessional contributions.

    Note that there are market factors indirectly impacting your overall super health, as you might be buying units (invested in stocks/bonds/cash) in your super when the market is high and withdrawing low.

    Disclaimer. Not an accountant, not advice. Just a fellow FHSSS.

  • trapper on 17/05/2023 - 14:16

    I'm in the 37% tax bracket for the 15k so my marginal tax rate with Medicare is 39%

    Reportable super contributions are included when calculating the Medicare levy, so you won't be getting any discount on that part.

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