What are the Unseen Benefits of FHSS Scheme?
Prior to the launching of the FHSS Scheme, there were no major benefits available for the first-time home-buyers. So let us dig more into the further benefits of using the FHSS Scheme for the same.
Financial hardship provision
In case of any applicant owning a house previously in Australia but due to financial hardships, he/she suffered losses in the ownership of all property interests, FHSS Scheme is applicable.
The type of events covering financial hardship provisions may include but are not limited to:
- Divorce, separation from a de-facto partner, or a relationship breakdown
- Loss of employment
- Natural disaster
- Being eligible for early access to superannuation.
How Do You Apply For Financial Hardship?
Following are the ways applying for Financial Hardship:
- using MyGov Account linked to the ATO.
- Filling First home super saver scheme – hardship application form.
The applicant first needs to apply for the scheme to see his/her eligibility. Also, enough pieces of evidence must be produced for demonstrating the link between property loss and hardship event.
In case of acceptance of financial hardship, the applicant must also meet the following conditions while lodging FHSS – hardship application form:
No acquirement of any subsequent interest in real property in Australia since losing of property as a result of financial hardship.
Must be 18 years old or older.
No previous requested for FHSS amount release.
How This Assists in SMSFs?
It would not eligible under the FHSS scheme amount release.
Before the applicant starts saving, he/she should:
- Check the nominated super fund (or funds) for money release
- Inquire about any fees, charges, and insurance implications that may apply
- Check about the super fund for current contact details to ensure the name matching
- Be aware to receive FHSS amounts affecting his tax for the year. He will receive a payment summary and he may need to produce both the assessable and tax-withheld amounts in tax return.
- In case he wants it to consider under financial hardship provision, then he should inquire with ATO for financial hardship provisions applicable.
Types of Contributions
- Voluntary concessional contributions – which includes salary sacrifice amounts or contributions for which a tax deduction has been claimed. These are usually taxed at 15% in the fund.
- Voluntary non-concessional contributions – made after-tax or if a tax deduction has not been claimed.
Contribution Up to An existing superannuation contribution caps can be made. The release of amounts under the FHSS scheme doesn’t affect the concessional or non-concessional contributions calculation for cap purposes. However, the contributions still count towards contribution caps for the year originally made.
How your order will contribute
- First-in first-out rule – This means that the previous financial year contributions are counted before later financial year contributions. The contributions being made within a particular financial year are counted in the ascending order being made.
- Simultaneous contributions rule – This means in case of eligibility of making an eligible concessional contribution and an eligible non-concessional contribution at the same time, the non-concessional contributions are considered to be made on preference.
- In case of contributions within the financial year and you claim a deduction for some or all of the contributions, the resulting eligible non-concessional contributions (if any) are considered to be made before any eligible concessional contribution.
There are many innumerable benefits of FHSS Scheme including the SMSF Services. So, you need to consider yourself the pros and cons of the same.