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Beware of super saver scheme tax implications

The date order in which superannuation contributions are received under the First Home Super Saver Scheme can have tax implications, according to SuperCentral.

SuperCentral superannuation special counsel Michael Hallinan said in respect of 2018/19, the date order in which contributions are received affects the taxation treatment of the released amount in the hands of the individual.

“The general rule is that each voluntary contribution is counted in the date order in which it is received and if both types of contributions are received on the same day, then the non-concessional contributions are counted first,” Hallinan said.

The date order in which the concessional and non-concessional contributions are received is equally important for 2019/20, he added.

The order in which contributions are counted for First Home Super Saver Scheme purposes affects the tax composition of the released amount.

“The released amount will consist of concessional component, non-concessional component and the associated earnings component,” Hallinan said.

“The concessional and associated earnings component will form the assessable portion of the release amount, while the non-concessional component will form the non-assessable portion.”

The amount of concessional contributions released and the associated earnings will be included in the individual’s assessable income, with the individual entitled to a 30 per cent tax offset.

“To the extent the released amount includes non-concessional contributions, they will not be included in assessable income,” Hallinan said.

Legislation to implement the First Home Super Saver Scheme was enacted in December 2017 and will apply from 1 July this year.

Under the scheme, individuals can withdraw up to a certain limit the amount of their voluntary super contributions plus associated earnings for the purpose of purchasing their first home.

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