Over $5 million in super released for first home buyers scheme
19 October 2018
In the period from 1 July 2018 to 6 August 2018 taxpayers have made 1,449 requests to the ATO under the first home super saver scheme, FHSS. These are called FHSS Determinations to enquire as to the amount which can be currently released under the scheme. Requesting an FHSS Determination does not amount to a request to access super savings: it is merely an enquiry as to how much can be accessed. In order to request access to super savings, a request for an FHSS release authority must be made.
From those 1,449 determinations, 592 individuals have requested that an FHSS release authority be issued. In response to those 592 requests, the ATO has issued 498 FHSS release authorities which have authorised the release of almost $5,350,000 of super savings.
This level of uptake of the FHSS in its first few months of operation is surprising for a couple of reasons.
First, there would seem to have been too little time for a material amount of eligible contributions to have been made and only one year’s worth of earnings accrued to make a release worthwhile. Qualifying contributions are subject to the double cap requirement of $15,000 per financial year and $30,000 in total. Although there is a sweetener provided by the Government in that for the 2017/18 financial year, in calculating the earnings on those contributions they are treated as having been made on 1 July 2017 – as the ATO has no means of capturing the date on which the contribution was made during the 2017/18 financial year.
The second is that the scheme operates on a once-only access basis. While an individual can make any number of requests for FHSS Determinations (these are simply a determination by the ATO of how much an individual can access) they can only make one request for a FHSS release authority. If the authority is issued then the individual can no longer request another release authority even if they continue to make voluntary super contributions or did not use the released amount.
How does FHSS work?
The FHSS scheme has been officially up and running since 1 July 2018. Under this scheme individuals who have never owned a home can have access to their super savings to buy their first home. In broad terms, the super savings which can be accessed are voluntary super contributions and earnings on those contributions.
For the purposes of the FHSS scheme, only contributions made on or after 1 July 2017 which are not super guarantee contributions are counted as voluntary contributions. Additionally, only the first $15,000 of voluntary contributions made in a single financial year qualify for the purposes of the scheme and at most only $30,000 of voluntary contributions can qualify.
Earnings are determined by the ATO using a statutory interest rate. While the amount of voluntary contributions which can qualify for the scheme is capped at $30,000, the amount of earnings is not capped.