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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Home Office Expenses

Recently the Australian Taxation Office (ATO) has updated their on-line guidance in relation to home office expenses for both, employees working from home and for businesses being operated from home.  The biggest change to the guidance is the requirement for a taxpayer to maintain at least a 4 week diary of home office use that is representative of the whole of the year or otherwise keep records of actual work related home office use for the whole year, if you are claiming home running costs under the fixed rate method.

Below is a table from the ATO guidance that shows what can and cannot be claimed under the different working scenarios:

Home office running expenses include the following:

• home office equipment
• Electricity and gas expenses
• the costs of repairs to your home office equipment, furniture and furnishing
• cleaning cost
• printing and stationery costs.

There are two methods that an employee can use to calculate their home office expenses deduction:

1. fixed rate method, or
2. actual method

Under the fixed rate method, the deduction is calculated by multiplying the number of hours that you used the office for work during the financial year by the fixed rate, which is currently is 45 cents.  The ATO requires that you maintain records of actual usage for the whole year or you can maintain a 4 week diary of the work usage of the home office that is representative of the whole year.

Under the actual method, you need to maintain records of all running cost expenses for the year and calculate the percentage of office floor space in relation to the total floor space of the house, which is then multiplied by the percentage of that you used the office for work during the year.

The only time an employee can claim a tax deduction for home occupancy expenses, such as rent, mortgage interest, insurance, and rates, is if an employer provides no other work location for the employee and the employee is required to dedicate part of their home to their employer’s business as an office.  It is important to note that should you claim home occupancy costs as a tax deduction for part of your home then you will be ineligible for the use of the main residence exemption for CGT purposes on that part of the home when you sell it.

If you are running your business from home, such as a dentist surgery or hairdressing salon, the following expenses are tax deductable:

• utility expenses, such as gas and electricity – which must be apportioned between business and private use, based on actual usage
• business phone costs
• depreciation on the office plant and equipment, such as desks, chairs, computers – which must be apportioned between business and private use
• depreciation of the curtains, carpets and light fittings of the room that is being used solely for business purposes
• occupancy expenses, such as rent, mortgage interest, insurance, and rates – apportioned between business and private use based on floor area that is being used for business as a proportion of the whole floor area of your home.

Again, it is important to note that the full main residence exemption will not apply if your home is your principal place of business.

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