First home super saver (FHSS) scheme
Releasing amounts under FHSS Scheme
From 1 July 2018, individuals can commence releasing amounts from superannuation under the FHSS Scheme. Applications to release must be directed to the ATO, who will determine the maximum amount that can be released. The amount released can be any amount up to the maximum release amount, which is:
- 85% of concessional contributions (discounted by 15% to account for contributions tax)
- 100% of non-concessional contributions and
- Associated earnings
Tax on withdrawal
Tax payable on the release amount depends on the contribution type:
- Non-concessional contributions: nil
- Concessional contributions: taxed at individual's marginal tax rate less a 30% tax offset
- Associated earnings: taxed at individual's marginal tax rate less a 30% tax offset
The associated earnings are calculated daily based on the shortfall interest charge (SIC) rate (4.72% as at Jan 2018). The released amounts are sent by the super fund to the ATO, who withholds tax and pays the net amount to the individual.
Under FHSSS, associated earnings are taxed at the client's marginal tax rate less a 30 per cent tax offset when withdrawn compared to investing outside superannuation and paying tax at the client's marginal tax rate.
Order in which contributions are counted
In working out which contributions are to be counted towards an individual's FHSS releasable contributions amount, contributions are counted in the order in which they were made (that is, from earliest to latest).
This ordering rule means that contributions in an earlier financial year are counted before contributions in a later financial year, and that contributions that are made within a financial year are counted in the order that they are made.
Multiple contribution types made in a financial year
It is important to note that where a person has made both FHSS eligible non-concessional and concessional contributions in a financial year, non-concessional contributions are treated as having been made before any FHSS eligible concessional contributions, which means that non-concessional contributions are always counted first (as they are treated as having been made first).
However, it should be noted that excess concessional contributions are disregarded in working out an individual's FHSS eligible non-concessional contributions.
Last modified: Wednesday, May 1, 2019