First Home Saver Super Scheme worth it?

My daughter is looking to buy in the next few years. She has employment income and income from her own sole trader which varies from year to year but generally her total income is roughly $120k pa. Claimed expenses are quite minimal. She pays BAS quarterly on her business income.

From what I can tell from the scheme she can salary sacrifice $15k per year into her super and then withdraw a max of $30k to put towards buying a house when the time is right.

How much will she save by doing this vs just continuing to save after tax money in the bank? How much will the $30k be taxed when she withdraws the money (assuming her income remains the same)? I haven't been able to find any examples. I found one link to budget.gov.au that was supposed to provide examples but the page was missing.

 

I was reading about a arrangement where you can draw $10K before 30 June and another $10K aftre this if you are eligible then also. Recontribute this (probably in the 2021 tax year !!) and claim a tax deduction (icnreasing refunds by $6500 or more) and then it can be released later under the first home saver super scheme as well. Provided the person meets the release rules it may not in itself be a prohibited scheme if certain prudent acts are undertaken eg timing of when the contribution is made and deduction claimed and also carry forward concessional contribution cap.

The effect of this arrangement may allow a benefit of more than $23,500K to be released yet it wont reduce salary. Far smarter than sal sac. terrific ROI

 

She can't access the early release $10k as she hasn't had any reduced hours or income drop and isn't on parenting or any other payment that would allow her to qualify for it.

 

If I recall correctly, if for some unknown-at-this-stage reason, she does not buy a house, then her savings are trapped in the super fund.

 

Yeah the money can only be used for a house purchase and must be lived in for at least 6 of the first 12 months. I don't think there is any time limit on when it can be applied for release but once released the applicant has to purchase a property in the following 12 months (possible extension to 24 months under certain circumstance) otherwise the money has to be placed back into the super fund.

 

How do the lenders see the FHSSS funds when it comes to their assessment of genuine savings?
- Are they automatically considered genuine savings?
- Will the lenders ask to see your super statement?
- Do the funds have to be in the super account for 3 months?
- Does there need to be a pattern of voluntary contribution savings, or can it be lump sum?

 

I think the buyer can apply to have the funds released before they make a purchase and they have up to 12 months in which they need to enter a contract (extendable to 24 months with a special request) otherwise they have to return the funds to the super account.

If they have the funds in their bank account which were from their own voluntary contributions I don't see why the bank can't see that as genuine savings. The only difference was they saved a bit extra via a tax break.

From what I can tell the voluntary contributions will be taxed at 15% so make 2 separate payments of $15k in 2 financial years. Taxed at 15% which results in $25,500 available funds. Normally they would have paid 30%+ tax on this so via normal savings only have a bit less than $20k. Then when the funds are released they pay their nominal tax rate less 30% so maybe a few % on it.

Seems to me only a few thousand in savings are possible unless I have it wrong.

 

That is how I believe it to work. The benefit of the scheme is the reduced tax rate

 

You save your marginal tax rate on the contributed amount less 15% contributions tax. Roughly speaking, this would be almost $5k if she contributed the max $30k over 2 years.
There is also deemed interest so you withdraw a little bit of your fund earnings as well.
Myself and my partner are both going through the FHSS currently.

Do NOT try and claim deductions for super contributions while withdrawing under corona/ financial hardship. It's already been flagged multiple times by the ATO.