Fusion Partners Central Coast - accountants, business advisors, financial planners Institute of Chartered Accountants

Withholding Tax

The First Home Owners Savings Account (FHSA)


 

created by John Cahill

18 July 2011

 

For more details on the FHSA please click here

Question

    I have received my statement for my FHSA and it has an entry each month "FHSA Withholding Tax" which takes money out of my account.

    I have rung up the bank to make sure they have my Tax File Number (TFN) but the "FHSA Withholding Tax" amounts keep being deducted.

    .

    Answer


    This is perfectly normal.

One of the requirements to setting up an FHSA is to provide a valid tax file number...you can't set up an FHSA without providing your TFN.

FHSA interest is not taxed like normal bank account interest...you do not put FHSA interest in your tax return each year.

The FHSA operates more like a superannuation fund and is taxed at a reduced rate of 15%.

The FHSA Withholding Tax is not Withholding Tax as we are used to with standard bank accounts, shares and managed funds, which is only charged when you do not provide your tax file number.

The FHSA Withholding Tax is calculated and deducted every time you are paid interest in the account (usually monthly). It will be exactly equal to 15% of the interest amount that you have earned for that period.

This way, the government has ensured that the 15% tax is always paid, and therefore there is no requirement for you to do any administration or tax calculations, like in a superannuation fund.

You cannot claim the FHSA withholding tax in your tax return.

 

Disclaimer

This article has been prepared for clients of Fusion Partners Central Coast (FPCC) ABN 37 113 405 218 and others on request.

The article is based upon generally available information and is not intended to be, or to replace specialist advice in the areas covered but rather, the article is intended to be informative and educational only.

Although the information is derived from sources considered and believed to be reliable and accurate, FPCC, its employees, consultants, advisers and officers to the maximum extent permitted by the law disclaim all liability and responsibility for any opinion expressed or for any error or omission that may have occurred in this document.

This article may contain general advice which is defined in the Corporations Act to mean that we have not taken into account any of your personal circumstances, needs or objectives. It is therefore imperative that you determine, before you proceed with any investment or enter into any transactions, whether the investment or transaction is suitable for you in consideration of your objectives, financial situation or needs and you must therefore, before acting on any information included in this article, consider the appropriateness of the information having regard to your personal situation. FPCC recommends that you obtain financial and tax or accounting advice based on your personal situation before making an investment decision.

All investments should be made with consideration of risk after reading the FSG and PDS of the product provider, and after obtaining professional advice from a financial planner.

This article was created by John Cahill, based on legislation in place at the time.  Legislative changes may mean that this information is no longer current.  You should speak to your financial adviser.