First home super saver scheme

The First Home Super Saver (FHSS) scheme allows you to save money for your first home inside your superannuation fund. The benefits of this can be that:

• Your savings are locked away until you buy a house
• Your earnings in your superannuation fund are taxed at a concessional rate
• Your super fund may offer a higher rate of return than is available to you ordinarily

The FHSS scheme, introduced by the Australian Government in the Federal Budget 2017–18, works as follows:

You make voluntary contributions into your super fund

• Before you make the contributions, you should check with your super fund:
  • that they will release the money
  • if any fees, charges and insurance may apply
• The contributions you make can be either:
  • Concessional contributions (before tax)
    • Including salary sacrifice amounts or contributions for which a tax deduction has been claimed, improving cashflow for savings. These contributions are taxed at 15% in your super fund.
  • Non-concessional contributions (after tax)
    • No tax deduction is claimed for these, and they are not taxed in your super fund.
• If your contribution caps allow, you can voluntarily contribute up to $15,000 per financial year that can be eligible for the FHSS scheme, and a total of $30,000 for all years. You should contact your accountant to find out what your contribution caps are.
• You can contribute into any super fund, except defined benefit interest or a constitutionally protected fund.
• You can contribute into more than one fund.

Watch your balance grow

• You can check your balance with your super fund(s) at any time to see how much you have saved.
• This will help you keep track of the maximum FHSS amounts you can have released.

Request a determination

• To withdraw your voluntary super contributions under the FHSS scheme, you need to request a FHSS determination from the Commissioner of Taxation.
• The ATO will tell you your maximum FHSS release amount.
• You can apply online using your myGov account linked to the ATO.
• You can request a determination on more than one occasion.

Request the release of your savings

• If you are ready to purchase your home, you can then decide to apply for a release of your amounts.
• You can apply for a release only once
• You can request a release of the FHSS maximum release amount stated in the FHSS determination or choose a lower amount.
• Once you have requested a release you can’t request another one, even if you have requested an amount less than your FHSS maximum release amount

Receive your amounts

• The ATO will issue a release authority to your super fund(s) requesting your FHSS release amounts
• It will take approximately 25 business days for your fund to release your money and for the ATO to pay it to you.

Sign the contract to purchase your property

• The ATO must have released an FHSS amount to you before you sign a contract to purchase or construct residential premises or you may be liable to pay FHSS tax.
• You have up to 12 months from the time the first amount is released to you to sign a contract to purchase or construct a home.
• If you do not sign a contract to purchase or construct a home within 12 months from the time the first amount is released to you, you can either:
  • apply for an extension of time for a maximum of a further 12 months
  • recontribute an amount into your super fund/s.
  • keep the released amount and be subject to a 20 % FHSS tax.
• You must notify the ATO if you either:
  •  sign a contract to purchase
  • construct a home, or
  • recontribute the amount into your super fund, otherwise you will be subject to the FHSS tax.

Lodge your tax return

• The ATO will withhold the appropriate amount of tax on your payment
• A payment summary will be sent to you at the end of the financial year showing your assessable FHSS released amount
• You need to include this amount in your tax return for the financial year you request the release.
• The tax payable on this assessable amount will receive a 30% tax offset.

Who is eligible?

You can start making super contributions from any age, but you can’t request a release of amounts under the FHSS scheme until you are 18 years old, and you:

• have never owned property in Australia – (unless the Commissioner of Taxation determines that you have suffered a financial hardship)
• have not previously requested the Commissioner to issue a FHSS release authority in relation to the scheme
• you either live in the premises you are buying or intend to as soon as practicable.
• you intend to live in the property for at least six months of the first 12 months you own it, after it is practical to move in.

Eligibility is assessed on an individual basis. This means that couples can each access their own eligible FHSS contributions to purchase the same property. If one of you has previously owned a home, it will not stop the other person who is eligible from applying.

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SUPERANNUATION GUARANTEE AMNESTY

On 24 May 2018, the Government announced the commencement of a 12 month Superannuation Guarantee Amnesty (subject to the passage of legislation) that is a once only opportunity for employers to disclose and pay previously undeclared super guarantee (SG) shortfalls without penalty. 

The Amnesty is available from 24 May 2018 to 23 May 2019. 

Benefits 

Employers who voluntarily disclose previously undeclared SG shortfalls during the Amnesty and before the commencement of an audit of their super guarantee will: 

• not be liable for the administration component of $20 per employee per late period 
• not be liable for Part 7 penalties that may otherwise apply to late SG payments; and 
• be able to claim a tax deduction for catch-up payments made within the 12-month period 

If you enter in to a payment plan with the ATO for your SG payments that extends past 23 May 2019, only those payments made between 24 May 2018 and 23 May 2019 will be deductible. 

Employers will still be required to pay all employee entitlements. This includes the unpaid SG amounts owed to employees and the nominal interest, as well as any associated general interest charge. 

Eligibility for the Amnesty 

To be eligible for the Amnesty you must: 

• voluntarily disclose amounts of SG shortfall within the 12-month Amnesty period – between 24 May 2018 and 23 May 2019, 
• disclose amounts of SG shortfall that have not previously been disclosed, and 
• not be subject to an audit of your SG for the relevant periods. 

The Amnesty applies to previously undeclared SG shortfalls for any period from 1 July 1992 up to 31 March 2018. It does not apply to shortfalls in SG accumulated after 1 April 2018. 

If you have already been assessed for a period, you can amend a previously disclosed SG shortfall, but only newly-disclosed amounts are eligible. 

How to access the Amnesty 

To take advantage of the Amnesty between 24 May 2018 and 23 May 2019, you need to: 

• Calculate your superannuation guarantee shortfall; and 

• Contact your accountant at GeersSullivan to calculate the nominal interest and organise the relevant application forms for submission to the ATO. 

Your accountant can provide further advice on participating in the Amnesty, based upon your particular circumstances. 

Payment options 

Where you can pay the full SG shortfall amount and the nominal interest you should pay directly to your employees’ super fund.  Where you are not able to pay the full SG shortfall amount for a period you should pay to the ATO and contact your accountant about setting up a payment plan. 

Impact on employees 

When you pay outstanding SG contributions, your employees will receive: 

• The SG shortfall amount  
• The nominal interest from the start of the relevant period to the date the SG is payable. 
• General Interest Charge that accrues on the SG shortfall amount. 

Make sure you inform your employees of any SG payments you make to them through the Amnesty as the contributions could result in them exceeding their concessional contributions cap. In this circumstance your employee should contact their accountant to apply to the Commissioner for his discretion to disregard the excess contributions made under the Amnesty.  

Contributions made under the Amnesty will not count towards your employees’ income or contributions for Division 293 purposes. 

Warnings 

Penalties  

Employers who are not up-to-date with their super guarantee payment obligations who do not come forward during the Amnesty may face higher penalties in the future. 

The Part 7 penalty is automatically imposed at 200% of the SGC amount, however this can be partially remitted. The ATO will take into account the employer’s ability to access the Amnesty, generally a minimum penalty of 50% of the SGC will be applied to employers who were eligible for the Amnesty but did not come forward. 

Passage of legislation 

Legislation to give effect to the Amnesty was introduced into Parliament on 24 May 2018 and is intended to apply retrospectively once enacted. 

If the proposed law does not come into effect: 

• any contributions and payments made under the Amnesty will not be tax-deductible. 
• any self-assessments that anticipated the new law will need to be amended to include the administration component, and you will be required to pay the administration component 
• Part 7 penalties will be imposed and may be remitted in accordance with the ATO’s existing remission policies. 

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