Income Tax (First Home Saver Accounts Misuse Tax) Act 2008

Administered by Department of the Treasury

Legislation au C2008A00046 Not in force Act

Legislation content

Income Tax (First Home Saver Accounts Misuse Tax) Act 2008

No. 46, 2008 as amended

Compilation start date:  25 June 2014

Includes amendments up to: Act No. 44, 2014

 

About this compilation

This compilation

This is a compilation of the Income Tax (First Home Saver Accounts Misuse Tax) Act 2008 as in force on 25 June 2014. It includes any commenced amendment affecting the legislation to that date.

This compilation was prepared on 2 July 2014.

The notes at the end of this compilation (the endnotes) include information about amending laws and the amendment history of each amended provision.

Uncommenced amendments

The effect of uncommenced amendments is not reflected in the text of the compiled law but the text of the amendments is included in the endnotes.

Application, saving and transitional provisions for provisions and amendments

If the operation of a provision or amendment is affected by an application, saving or transitional provision that is not included in this compilation, details are included in the endnotes.

Modifications

If a provision of the compiled law is affected by a modification that is in force, details are included in the endnotes.

Provisions ceasing to have effect

If a provision of the compiled law has expired or otherwise ceased to have effect in accordance with a provision of the law, details are included in the endnotes.

 

 

 

Contents

1 Short title

2 Commencement

3 Definitions

4 Imposition of tax

5 Amount of tax

6 Clawback tax amount

7 Nonrecognised Government FHSA contributions

8 Temporary budget repair levy

Endnotes

Endnote 1—About the endnotes

Endnote 2—Abbreviation key

Endnote 3—Legislation history

Endnote 4—Amendment history

Endnote 5—Uncommenced amendments [none]

Endnote 6—Modifications [none]

Endnote 7—Misdescribed amendments [none]

Endnote 8—Miscellaneous [none]

 

An Act to impose income tax in respect of certain payments from first home saver accounts

1  Short title

  This Act may be cited as the Income Tax (First Home Saver Accounts Misuse Tax) Act 2008.

2  Commencement

  This Act commences on the day after it receives the Royal Assent.

3  Definitions

  In this Act:

adjusted maximum tax rate means the sum of:

 (a) the maximum rate specified in column 2 of the table in Part I of Schedule 7 to the Income Tax Rates Act 1986; and

 (b) 2%.

family law obligation has the meaning given by the First Home Saver Accounts Act 2008.

FHSA has the meaning given by the First Home Saver Accounts Act 2008.

FHSA eligibility requirements has the meaning given by the First Home Saver Accounts Act 2008.

FHSA ineligibility payment has the meaning given by the First Home Saver Accounts Act 2008.

FHSA payment conditions has the meaning given by the First Home Saver Accounts Act 2008.

FHSA tax rate means the rate specified in paragraphs 23(3)(aa) and 23(3A)(a) and section 30 of the Income Tax Rates Act 1986.

Government FHSA contribution has the meaning given by the First Home Saver Accounts Act 2008.

hold: an individual holds an FHSA in the circumstances mentioned in section 9 of the First Home Saver Accounts Act 2008.

nonrecognised Government FHSA contribution has the meaning given by section 7.

personal FHSA contribution has the meaning given by the First Home Saver Accounts Act 2008.

4  Imposition of tax

  The tax known as income tax, to the extent that it is payable in accordance with section 345100 of the Income Tax Assessment Act 1997, is imposed in respect of a payment from an FHSA held by an individual.

5  Amount of tax

 (1) If the payment is an FHSA ineligibility payment (but satisfies the FHSA payment conditions) the amount of the tax is the sum of:

 (a) the clawback tax amount for the FHSA (see section 6); and

 (b) the sum of each nonrecognised Government FHSA contribution (see section 7) of the individual that is payable for a financial year that began before the payment is made.

 (2) If the payment fails to satisfy the FHSA payment conditions, the amount of the tax is the sum of:

 (a) the clawback tax amount for the FHSA (see section 6); and

 (b) the sum of each Government FHSA contribution of the individual that is payable for a financial year that began before the payment mentioned in section 4 is made.

6  Clawback tax amount

 (1) The clawback tax amount for the FHSA is the amount worked out under subsection (2) multiplied by the percentage worked out under subsection (3).

 (2) Work out the amount using the following formula:

where:

earnings component of the FHSA means the balance of the FHSA just before the time the payment is made, reduced (but not below zero) by:

 (a) the amount of personal FHSA contributions made before that time to an FHSA held by the individual; and

 (b) the amount (if any) paid by way of Government FHSA contributions before that time to an FHSA held by the individual; and

 (c) the amount (if any) of contributions made before that time to an FHSA held by the individual because of a family law obligation.

payment fraction means:

 (a) if the payment is of the balance of the FHSA—1; or

 (b) otherwise—the amount of the payment divided by the balance of the FHSA just before the payment is made.

 (3) The percentage is the adjusted maximum tax rate reduced by the FHSA tax rate.

7  Non‑recognised Government FHSA contributions

  A Government FHSA contribution that is payable for a financial year for an individual is a nonrecognised Government FHSA contribution of the individual if the individual did not satisfy the FHSA eligibility requirements throughout the financial year.

8  Temporary budget repair levy

 (1) This section applies to payments from an FHSA made in a temporary budget repair levy year.

 (2) Increase the amount of the adjusted maximum tax rate by 2 percentage points for the purpose of working out the clawback tax amount (see section 6) for the FHSA in relation to the payment.

 (3) In this section:

temporary budget repair levy year has the same meaning as in section 411 of the Income Tax (Transitional Provisions) Act 1997.

 

Endnotes

Endnote 1—About the endnotes

The endnotes provide details of the history of this legislation and its provisions. The following endnotes are included in each compilation:

 

Endnote 1—About the endnotes

Endnote 2—Abbreviation key

Endnote 3—Legislation history

Endnote 4—Amendment history

Endnote 5—Uncommenced amendments

Endnote 6—Modifications

Endnote 7—Misdescribed amendments

Endnote 8—Miscellaneous

 

If there is no information under a particular endnote, the word “none” will appear in square brackets after the endnote heading.

 

Abbreviation key—Endnote 2

The abbreviation key in this endnote sets out abbreviations that may be used in the endnotes.

 

Legislation history and amendment history—Endnotes 3 and 4

Amending laws are annotated in the legislation history and amendment history.

 

The legislation history in endnote 3 provides information about each law that has amended the compiled law. The information includes commencement information for amending laws and details of application, saving or transitional provisions that are not included in this compilation.

 

The amendment history in endnote 4 provides information about amendments at the provision level. It also includes information about any provisions that have expired or otherwise ceased to have effect in accordance with a provision of the compiled law.

 

Uncommenced amendments—Endnote 5

The effect of uncommenced amendments is not reflected in the text of the compiled law but the text of the amendments is included in endnote 5.

 

Modifications—Endnote 6

If the compiled law is affected by a modification that is in force, details of the modification are included in endnote 6.

 

Misdescribed amendments—Endnote 7

An amendment is a misdescribed amendment if the effect of the amendment cannot be incorporated into the text of the compilation. Any misdescribed amendment is included in endnote 7.

 

Miscellaneous—Endnote 8

Endnote 8 includes any additional information that may be helpful for a reader of the compilation.

 

Endnote 2—Abbreviation key

 

ad = added or inserted

pres = present

am = amended

prev = previous

c = clause(s)

(prev) = previously

Ch = Chapter(s)

Pt = Part(s)

def = definition(s)

r = regulation(s)/rule(s)

Dict = Dictionary

Reg = Regulation/Regulations

disallowed = disallowed by Parliament

reloc = relocated

Div = Division(s)

renum = renumbered

exp = expired or ceased to have effect

rep = repealed

hdg = heading(s)

rs = repealed and substituted

LI = Legislative Instrument

s = section(s)

LIA = Legislative Instruments Act 2003

Sch = Schedule(s)

mod = modified/modification

Sdiv = Subdivision(s)

No = Number(s)

SLI = Select Legislative Instrument

o = order(s)

SR = Statutory Rules

Ord = Ordinance

SubCh = SubChapter(s)

orig = original

SubPt = Subpart(s)

par = paragraph(s)/subparagraph(s)

/subsubparagraph(s)

 

 

 

Endnote 3—Legislation history

 

Act

Number and year

Assent

Commencement

Application, saving and transitional provisions

Income Tax (First Home Saver Accounts Misuse Tax) Act 2008

46, 2008

25 June 2008

26 June 2008

 

Income Tax (First Home Saver Accounts Misuse Tax) Amendment (DisabilityCare Australia) Act 2013

40, 2013

28 May 2013

Schedule 1: 28 May 2013 (see s. 2(1))
Remainder: Royal Assent

Sch. 1 (item 2)

Income Tax (First Home Saver Accounts Misuse Tax) Amendment (Temporary Budget Repair Levy) Act 2014

44, 2014

25 June 2014

Sch 1: 25 June 2014 (see s 2(1))
Remainder: Royal Assent

 

Endnote 4—Amendment history

 

Provision affected

How affected

s. 3.....................

am. No. 40, 2013

s 8.....................

ad No 44, 2014

 

Endnote 5—Uncommenced amendments [none]

Endnote 6—Modifications [none]

Endnote 7—Misdescribed amendments [none]

Endnote 8—Miscellaneous [none]

 

 

 

 

 

Overview

The Income Tax (First Home Saver Accounts Misuse Tax) Act 2008 was enacted to address the misuse of First Home Saver Accounts (FHSA) by imposing income tax on certain payments from these accounts. The Act was introduced by the Commonwealth Parliament with the aim of ensuring that the FHSA system, designed to assist first-time homebuyers, is not exploited. The legislation specifies the imposition of income tax on payments from FHSAs that do not meet the eligibility criteria or payment conditions, aiming to recoup the tax benefits provided by such accounts when misused. This Act complements the First Home Saver Accounts Act 2008, reinforcing the integrity of the FHSA scheme by discouraging improper withdrawals.

Scope and Application

The Income Tax (First Home Saver Accounts Misuse Tax) Act 2008 applies to individuals holding First Home Saver Accounts (FHSAs) in Australia and the misuse of these accounts. This Act imposes income tax on certain payments from FHSAs to ensure that these accounts are used for their intended purpose, which is to help first home buyers save for their first home. The tax applies to payments made from an FHSA held by an individual, and the amount of the tax is calculated based on whether the payment is an FHSA ineligibility payment that satisfies the FHSA payment conditions or a payment that fails to satisfy these conditions. The Act also includes provisions for calculating the clawback tax amount for the FHSA and addressing non-recognised Government FHSA contributions. The Act's jurisdiction is national, applying across all states and territories of Australia, and it extends its application through subordinate instruments such as amendments and legislative instruments.

Key Provisions

The Income Tax (First Home Saver Accounts Misuse Tax) Act 2008 (Cth) imposes income tax on payments from First Home Saver Accounts (FHSAs) under specific conditions (section 4). According to section 5, the amount of tax is determined based on whether the payment is an FHSA ineligibility payment that satisfies the FHSA payment conditions, or if the payment fails to meet these conditions. If the payment is an FHSA ineligibility payment but satisfies the FHSA payment conditions, the tax amount includes the clawback tax amount and any non-recognised Government FHSA contributions (section 5(1)). If the payment does not meet the FHSA payment conditions, the tax amount includes the clawback tax amount and any Government FHSA contributions (section 5(2)). The clawback tax amount is calculated using the formula in section 6(2) and is subject to the adjusted maximum tax rate reduced by the FHSA tax rate (section 6(3)). The Act imposes several obligations on the parties involved. Firstly, individuals holding an FHSA must ensure they satisfy the FHSA eligibility requirements throughout the financial year to avoid their Government FHSA contributions being classified as non-recognised (section 7). Secondly, individuals must comply with the FHSA payment conditions to avoid higher tax liabilities (section 5). Failure to adhere to these conditions can result in additional taxes and penalties. Additionally, the Act requires accurate reporting of FHSA payments and contributions to the relevant tax authorities. The Act outlines specific offences and penalties for non-compliance. If an individual fails to satisfy the FHSA eligibility requirements, their Government FHSA contributions may be treated as non-recognised, leading to higher tax liabilities (section 7). Furthermore, if a payment from an FHSA fails to meet the FHSA payment conditions, the individual may be subject to additional taxes. The Act does not specify maximum penalties, but non-compliance can result in significant financial repercussions, including interest and additional tax assessments. In cases of deliberate misuse or fraud, criminal penalties may apply under other relevant legislation. The Act also includes provisions for a temporary budget repair levy, which applies to payments from an FHSA made in a temporary budget repair levy year. This levy increases the amount of the adjusted maximum tax rate by 2 percentage points for calculating the clawback tax amount (section 8). This levy is intended to address specific fiscal measures and is in effect for the period specified in the Income Tax (Transitional Provisions) Act 1997.

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Taxation Law
Instrument
Act
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Definitions & Interpretation
Commencement Provisions
Imposition of tax
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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.