First Home Super Savare Scheme (FHSS)

What Are the Release Options of FHSS?

With the ever-changing scenario of Australian accounting requirements and regulations, it is tough to keep an updated for the same. Let us have a further look at the option of FHSS amount release and savings alternatives.

Apply for savings release

The applicant can check his/her super funds at any point in time. This will help to keep track and manage the maximum FHSS amounts released. When ready for receiving FHSS amounts, the applicant needs to apply for FHSS determination and a release to ATO.

The applicant can sign a purchase contract or construct home either:

  • from the date, the applicant makes a valid request to release His/her FHSS amounts
  • before making a valid request to release your FHSS amounts.

In case of contract signing or home construction before making valid release request for FHSS amounts, the applicant needs to:

  • have an FHSS determination before signing.
  • make a valid release request within 14 days of contract.

In case the applicant already made a valid FHSS determination and have signed a contract, then he cannot request a new determination and must request for FHSS amounts release within 14 days of contract signing.

Maximum release amount

The maximum release amount for FHSS is the total sum of eligible contributions while considering the yearly and total limits, along with associated earnings. This includes:

  • 100% of eligible non-concessional contributions
  • 85% of eligible concessional contributions
  • associated earnings calculated on these contributions with a deemed rate of return based on the 90-day Bank Bill rate plus three percentage points i.e. shortfall interest charge rate.
  • The maximum release amount of FHSS is considered with account of $15,000 limit from any 1 year and $30,000 total limit to the total contributions across all years while evaluating the eligible contributions and before adding the associated earnings.

Amount Determination Request

To withdraw voluntary super contributions under the FHSS scheme, the applicant needs to request an FHSS determination from ATO. This can be done by using the myGov account. Once the ATO will receive a request, it will provide the maximum FHSS release amount to the applicant. The Applicant can request a determination on more than one occasion.

Note: In case of already requested FHSS determination and contract signing before making a valid release request, the applicant has 14 days to request for FHSS amounts release. In case the applicant signed the contract for more than 14 days before the release request of FHSS amounts, then he will be subjected to FHSS tax.

The applicant needs to keep in mind that he:

  • can apply for a release only once.
  • must confirm as part of release application not to claim further tax deductions on the non-concessional contributions included in the determination.

Request for savings release

Before release request for savings, the applicant should:

  • check that he has made all of the voluntary FHSS contributions
  • make sure he agrees with the amounts shown in the FHSS determination. In case of any discrepancy, he needs to resolve the issues via ATO’s standard review processes for determinations before release application.

Receive Released Amount

ATO will issue the release authority to the superfunds to request FHSS Release Amount. Before sending the balance of the released amount, ATO will:

  • withhold the appropriate tax amount.
  • offset the remaining amount against any other outstanding Commonwealth debts.

Generally, 15 to 25 business days is required for release of funds and for credit in the account. With this, a payment summary will be generated and sent to the applicant at the end of the financial year. This will demonstrate the assessable FHSS released amount comprising of:

  • concessional contributions
  • associated earnings on both concessional and non-concessional contributions.

The applicant needs to include this amount in the tax return for the financial year for release request. The tax payable on this assessable fund would receive a 30% tax offset.

ATO will withhold the tax on your assessable FHSS released amount and that will be calculated at either:

  • your expected marginal tax rate, including Medicare levy, less a 30% offset
  • 17% if the Commissioner is unable to estimate your expected marginal rate

What After Release of Savings?

After the release of savings, the applicant has up to 12 months or other allowed tenure from the requested date of FHSS Scheme amount release to sign a contract to purchase or construct a home.

The contract has to be residential premises located in Australia and should not be from the ones listed below:

  • any premises not capable of being occupied as a residence
  • a houseboat
  • a motor home
  • vacant land

Trying the FHSS Scheme while buying your first house would burn a hole in your pocket. Probably, visiting your financial adviser would be the best step while you are applying for the scheme and enjoy its benefits thereafter..

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