Straight answer is YES. Let’s take an exmaple:
A concessional contribution of $10,000 would be taxed at 15% within your superannuation fund leaving you you with $8,500 in your super account.
When you withdraw the $8,500, under the FHSS Scheme, the withholding rate would be 9% (39% less the 30% offset), assuming you are at 37% tax bracket with 2% medicare levy. So $8,500 less 9% withholding tax would leave you with $7,735. This is more than the $6,300 you calculated if you did not use the FHSS Scheme. Note this calculation does not take into account the associated earnings on the contributions which would also be withdrawn under the FHSS scheme. The withholding rate would also be applied to the associated earnings.
The above calculation assumes you remain in the same 37% tax bracket and the Medicare levy of 2% remains the same in the year you request the withdrawal. In summary the withholding rate will be calculated as follows:
- Your taxable income from the last year plus your assessable FHSS released amount. This equals your estimated income for the year you request withdrawal. Then,
- Calculate the tax rate based on this estimated income.
- Then add the Medicare levy to this tax rate.
- Then reduce this figure by the 30% offset.
- This will be your withholding rate that will be applied to the assessable FHSS released amount for the year you request withdrawal.
Important things to know
There are a number of important things you need to know if you plan to use the FHSS scheme:
- You must apply for and receive a FHSS determination from us before signing a contract for your first home or applying for release of your FHSS amounts.
- You need to make sure you correctly enter each of your eligible contributions into the FHSS determination form, do not total the contributions.
- Superannuation guarantee contributions made by your employer, and spouse contributions cannot be released under the FHSS scheme.
- If you make an error in your FHSS determination you can correct this by requesting another determination, provided you have not signed a contract or requested a release.
- If you provide incorrect information in your FHSS determination and later request a release based on that incorrect information, it is likely that your request will be cancelled and any FHSS money will be returned to your super fund.
- You can only request a release under the FHSS scheme once. If your release request is cancelled, you will not be able to apply again in the future.
- You should request the release of your FHSS amounts around the same time you start your home buying activities – for example, when you apply for a home loan.
- The home you purchase or construct must be located in Australia.
- If you’ve already received a determination and signed your contract to purchase or construct your home, you must make a valid release request within 14 days of entering into that contract.
- You can also sign your contract after you make a valid release request. You have 12 months from the date you make a valid release request to notify us if you have signed a contract to purchase or construct your home, or recontributed the required amount to your super fund (see information below)
- After you have requested the release, it may take between 15 and 25 business days for you to receive your money.
Who is eligible
You can start making super contributions from any age. However, you must be 18 years old or older to request a determination or a release of amounts under the FHSS scheme.
Also, you must have:
- never owned property in Australia – this includes an investment property, vacant land, commercial property, a lease of land in Australia, or a company title interest in land in Australia (unless the Commissioner of Taxation determines that you have suffered a financial hardship)
- not previously requested the Commissioner to issue a FHSS release authority in relation to the scheme.
Eligibility is assessed on an individual basis. This means that couples, siblings or friends can each access their own eligible FHSS contributions to purchase the same property. If any of you have previously owned a home, it will not stop anyone else who is eligible from applying.
Source: ATO/ ATO Community