First home super saver (FHSS) scheme
How much can be contributed
From 1 July 2017, contributions are limited to $15,000 in any one financial year and $30,000 in total contributions across all years under the scheme.
To be an 'eligible' contribution for an individual, the contribution must have been made:
- as 'voluntary' employer contributions (such as a salary sacrificed contribution) in respect of the individual or voluntary member contributions made by the individual
- as a concessional or non-concessional contribution, and
- within the relevant contributions caps (i.e. $25,000pa concessional cap and $100,000pa non-concessional cap).
Please note that the following types of contributions are not eligible under the FHSS Scheme:
- Super guarantee
- Spouse or child contributions
- Contributions for personal injury, and
- Small business CGT contributions.
Contributions made under the FHSS scheme are taxed as normal, meaning that:
- Concessional contributions are taxed at 15%
- Non-concessional contributions are not taxed
The greatest tax benefit for individuals under the FHSS Scheme will occur where concessional contributions are used, as the contributions into super are taxed at 15% compared to marginal tax rate on the way in.
The net amount contributed, along with deemed earnings, can then be withdrawn for a deposit. Withdrawals will be taxed at marginal tax rates less a 30% tax offset.
As non-concessional contributions are effectively after-tax contributions, the tax savings for clients making such contributions under the FHSSS are minimal.
Lisa earns $60,000 a year and wants to buy her first home. Using salary sacrifice, she annually directs $10,000 of pre-tax income into her superannuation account, increasing her balance by $8,500 after the contributions tax has been paid by her fund. After three years, she is able to withdraw $27,380 of contributions and deemed earnings on those contributions. Her withdrawal is taxed at her marginal rate (including Medicare levy) less a 30 per cent offset. After paying $1,620 of withdrawal tax she has $25,760 that she can use for her deposit. Lisa has saved around $6,240 more for a deposit than if she had saved in a standard deposit account.
Lisa's partner Michael has the same income and also salary sacrifices $10,000 annually to superannuation over the same period. Together they have $51,520 that they can put towards a deposit, $12,480 more than if they had saved in a standard deposit account.
Last modified: Sunday, July 21, 2019