On 1 November 2018, the ATO published the FHSS Scheme guidance note, GN 2018/1 (Guidance Note), which aims to provide further assistance for individuals, funds and intermediaries. The ATO also released the FHSS Scheme Law Companion Ruling, LCR 2018/5 (Law Companion Ruling) on 15 August 2018. This article will discuss the Guidance Note.Rafael Perez, Maddocks Lawyers
In our previous ClearLaw article on this topic, we introduced the key elements of the FHSS Scheme. In essence, the FHSS Scheme allows eligible first home buyers to:
Eligibility to access the FHSS Scheme
The Guidance Note provides further details on the FHSS Scheme eligibility requirements, including:
The Guidance Note confirms the kinds of contributions that are eligible for release under the FHSS Scheme, as well as those that are not eligible. Importantly, eligible contributions include:
Eligible voluntary concessional and non-concessional contributions made into a super fund from 1 July 2017 may be eligible to be accessed under the FHSS Scheme.
Applying for a FHSS determination for the release of funds
From 1 July 2018, individuals can apply to the ATO for a FHSS determination, for the release of eligible funds, up to the maximum amount (known as the FHSS maximum release amount). There is a limit of $15,000 of eligible contributions per financial year that may be counted towards the FHSS maximum release amount, and a total limit of $30,000 of eligible contributions across all years. Concessional and non-concessional contributions which exceed the concessional contributions cap or non-concessional contributions cap, as applicable, are not counted for the purposes of releasing funds under the FHSS Scheme.
The Guidance Note also sets outs the specifics of how the FHSS maximum release amount is calculated, which involves considering:
The Guidance Note also discusses the concept of the ATO’s “order rules” which are used to determine which eligible contributions are counted when calculating the FHSS maximum release amount.
Using released amounts to purchase or construct a home
Following an FHSS determination and the release of funds by the ATO, the funds may be used to purchase or construct a house. A person has up to 12 months from the time the first amount is released by the ATO to sign a contract to purchase or construct a home. Amongst other things:
If the individual does not enter into a contract to purchase or construct a home within the 12 month timeframe, the following options are available:
The FHSS Scheme has implications for people with an SMSF who are considering accessing the FHSS Scheme. Individuals holding funds in an SMSF should ensure their trust deed is drafted in a way that allows trustees to release funds to members as anticipated by the FHSS Scheme. If the SMSF does not – then individuals should consider updating or amending their deed.
The Cleardocs SMSF Trust Deed has been drafted broadly enough that it permits trustees to release funds to members for the purposes of the FHSS Scheme.
Individuals with an SMSF are also well advised to ensure their investment strategy supports the application of funds in order to obtain the benefits under the FHSS Scheme. To provide greater certainty that the trustee is complying with its duties, an investment strategy for your SMSF will assist the SMSF trustee to remain compliant with any investment strategy and superannuation law.
The Cleardocs SMSF Investment Strategy is also available to assist individuals in these matters.
Individuals should also ensure they are, or the trustee of their SMSF is, keeping adequate records in respect of voluntary contributions being made to the fund.
For more information, contact Maddocks on (03) 9258 3555 and ask to speak to a member of the Commercial team.
You can read earlier ClearLaw articles on a range of topics, such as:
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Melissa is a lawyer in the Maddocks Commercial team.
Melissa has been involved in acting for a range of commercial and professional industry clients.
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For more information, contact Maddocks on (03) 9258 3555 and ask to speak to a member of their team.