| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of administratively binding advice
Authorisation Number: 1011965332642
This edited version of your advice will be published in the public Register of private binding rulings after 28 days from the issue date of the advice. The attached ATO advice fact sheet has more information
Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.
Subject: Excess contributions cap
Question
1. Is a transfer into a superannuation fund from a First Home Saver Account a concessional contribution?
2. Is a transfer into a superannuation fund from a First Home Saver Account a non-concessional contribution?
Advice
1. No.
2. Yes
This advice applies for the following period:
2011-12 income year
The arrangement commences on:
1 July 2011
Relevant facts and circumstances
You currently have a First Home Savers Account.
You propose to close your First Home Savers Account and transfer the balance to your superannuation.
You are under 60 years of age.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 292-25
Income Tax Assessment Act 1997 Section 295-171
Income Tax Assessment Act 1997 Subsection 290-5(d)
Income Tax Assessment Act 1997 Subsection 290-5(e)
Reasons for decision
Summary
The transfer into a superannuation fund from a First Home saver Account is not a concessional contribution.
The transfer into a superannuation fund from a First Home saver Account is a non-concessional contribution.
Detailed reasoning
If you change your mind about buying a home, you must close your First Home Saver Account (FHSA) and transfer the balance to a complying superannuation plan (unless you are aged 60 or over in which case the balance can be transferred directly to you).
You are under 60 years of age so if you close your FHSA you must transfer the amount into a complying superannuation plan.
Under section 295-171 of the Income Tax Assessment Act 1997 (ITAA 1997), where you choose to transfer the account balance from your FHSA to a complying superannuation plan, the payment is a contribution into the superannuation system (rather than a rollover or transfer within the superannuation system). This section, however, excludes the contribution made from the FHSA from being included in the assessable income of the superannuation plan.
The contribution is a tax-free member contribution, like a personal undeducted contribution, for the purposes of the fund and your income tax. However, while the contribution is similar to a personal contribution, it does not attract a super co-contribution.
A concessional contribution is defined in section 292-25 of the ITAA 1997. One of the conditions that must be satisfied, for a contribution to be a concessional contribution, is that the contribution is included in the assessable income of the superannuation provider (subsection 292-25(b)).
Consequently, because the contribution from the FHSA is excluded from the assessable income of the fund, no part of your FHSA that is transferred to a complying superannuation plan (including any FHSA government contributions included in the balance or paid after that) will count toward your concessional contributions for the year of income.
The contributions made when the balance of a FHSA is transferred to a complying superannuation plan (including any FHSA government contributions included in the balance or paid after that), is counted toward your non-concessional contributions for the year of income and forms part of the tax-free component of your superannuation balance.
Under subsections 290-5(d) and 290-5(e) of the ITAA 1997, you will not be able to obtain a deduction or tax offset for the FHSA contributions.
Please note that for the 2011-12 income year, the non-concessional contributions cap is $150,000 per person (those under 65 years old may be able to bring forward up to two years of contributions, giving them a cap of $450,000 over three years).
In future financial years, the non-concessional cap will change as the concessional cap changes with indexation.