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FHSS changes ahead to prevent adverse financial outcomes
Legislative changes could see more super fund members eligible for the First Home Super Saver Scheme (FHSS).
Under the Treasury Laws Amendment (2023 Measures No.3) Bill, which was currently before the House of Representatives, schedule 4 of the bill would bring about changes to the FHSS to ensure it works better for first home buyers.
The FHSS had first been introduced in the 2017–18 budget as a way for people to save money for their first home within their superannuation via voluntary concessional and non-concessional contributions. A maximum of $15,000 could be saved in one financial year with a total maximum releasable amount of $50,000.
In a speech in the House of Representatives, Minister for Financial Services, Stephen Jones, said: “Currently, the legislation underpinning the First Home Super Saver Scheme is inflexible and can result in a poor user experience with the scheme, including users having their savings for a first home locked away until retirement, not what was intended by the scheme but the way the scheme is operating under its current rules.
“These changes will better enable mistakes made during the First Home Super Saver Scheme release process to be fixed without adverse financial outcomes for those who use the scheme.”
Changes would be retrospective and apply to eligible applications made from 1 July 2018 to ensure users who had not yet been paid their savings could still access that money.
They included:
- Increasing the discretion of the Commissioner of Taxation to amend and revoke applications to have funds released under the First Home Super Saver Scheme
- Allowing individuals to do the same without being prevented from reapplying in the future
- Allowing up to 90 days, instead of 14 currently, for individuals to request a release authority after they enter into a contract to purchase or construct a home
- Allowing the Commissioner of Taxation to return any FHSS Scheme amounts to superannuation funds, provided the amount has not yet been released to the individual
- Clarifying that FHSS Scheme amounts returned by the Commissioner of Taxation to superannuation funds are treated as funds’ non-assessable non-exempt income and do not count towards individuals’ contribution caps
- Special transitional provisions that extend the flexibility to eligible users who had previously applied unsuccessfully and had since started holding a relevant interest in real property or land
AUTHOR
Laura Dew
Laura Dew is editor at Super Review. Prior to joining SR, she spent five years working at Investment Week in the UK covering asset and wealth management.
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