first home super saver scheme

Using your super account to help save for your first home.

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The First Home Super Saver Scheme (FHSSS) allows people who have never owned a property to make extra contributions into super, using super's lower tax rates to help save for a first home.
 

The Federal Government allows you to contribute extra money into your super (up to $15,000 per financial year), then draw that money out as a deposit on your first home. The maximum you can contribute and withdraw towards the FHSSS is $30,000 across all years to put towards your deposit for your first home.

The federal government has proposed as part of its budget package announcements to increase the maximum accessible amount that can be withdrawn under the FHSS Schedule to $50,000 effective 1 July 2022.

 

There are lots of rules around this scheme

The main points are on this page, but visit the ATO website for further details.

 

Under the scheme, you can make concessional (before-tax)* and non-concessional (after-tax) contributions into your super fund specifically for a home deposit. Before-tax contributions are taxed at only 15% (which could be less than your current tax rate), and after-tax contributions are made into your super from after-tax income. And any earnings you get from returns on these contributions are yours to keep in your super.

Any before-tax or after-tax contributions you make into your super after 1 July 2017, for the purpose of buying a home, can be withdrawn after 1 July 2018. Note that the government intends to review the FHSSS and there is a risk the scheme may cease. Members should take this into consideration when making contributions for the purpose of the FHSSS.

*Concessional contributions do not include employer mandates or SG contributions.

To be able to take your money out via the FHSSS, you must:

  • be 18 years or over to apply for the release funds
  • not have previously owned a property* in Australia
  • not have previously released FHSSS funds
  • either live or intend to live in the premises you are buying as soon as practicable, and
  • intend to live in the property for at least six months of the first 12 months you own it (after it is practical to move in).

*Exceptions may apply if the Commissioner of Taxation has determined you have suffered a financial hardship as specified by regulations.

The key point is that it must be your first property purchase. Your 'first property' can be any of the following:

  •  a home
  •  an investment property
  •  a commercial property
  •  a lease of land in Australia, or
  •  a company title interest in land in Australia.

Click here to see what type of property you cannot buy with funds from the FHSSS (that includes a houseboat or motorhome).

For the purpose of the FHSSS, you can contribute:

  • up to $15,000 each financial year, and
  • a maximum of $30,000 across all years.

Please note that the concessional (before-tax) and non-concessional (after-tax) caps still apply.
 

Visit the ATO website for more information.

When you're ready, you can release your own contributions of up to $15,000 in any one financial year, and up to the maximum amount of $30,000 across all years plus associated earnings (a deemed amount of earnings as calculated by the ATO) to help purchase your first home. However, you can’t apply to release any SG contributions your employer has made for you, under the FHSSS.

You can release up to 100% of your after-tax contributions, but only 85% of your before-tax contributions and associated earnings. It’s worth remembering that associated earnings are not the same as investment earnings from your super fund and are calculated differently. 

Associated earnings are calculated on these contributions using a deemed rate of return.
 

Visit the ATO website for more information.

Before-tax contributions and all associated earnings are included in your assessable income. After-tax contributions are not assessable, as tax has already been paid (however the earnings on them are assessable).

When the ATO releases your FHSSS savings to you, the funds form part of your assessable income in your income tax return for that year. This applies for the year the request was made e.g. if the request was made on 1 June 2020, this would be included in the 2019-20 financial year, even though the funds may not be received until the next financial year.

The ATO will send you a payment summary when it releases your funds.

This will show the assessable FHSSS released amounts of your before-tax contributions and the earnings of both your before and after-tax contributions.

You’ll need to include this amount in your tax return for the year the request for release was made, however family assistance and child support payments are not impacted by the release of these funds. 

By saving and releasing funds through the FHSSS, you are entitled to a 30% tax offset for the released amount in that income year.

The offset cannot be refunded, transferred or carried forward. The ATO will withhold tax that will be calculated at either:

  • your marginal tax rate less a 30% offset, or
  • 17% if the ATO is unable to estimate your expected marginal rate.

Where the amount of tax deducted exceeds your marginal tax rate, this will be rectified through your tax return.

Once super contributions have been released, you have up to 12 months to sign a contract to purchase or construct a home.

If you haven't contracted to purchase or construct a home within 12 months of receiving the FHSSS amounts, you can either:

  • apply for an extension of up to 12 months
  • put the same amount of money back into super less any tax withheld by the ATO, or
  • keep the released amount and be subject to a FHSSS tax. 

This is a flat tax equal to 20% of your assessable FHSSS released amounts.

If you save for your first home within the FHSSS, you can ask the ATO for  a 'determination'. The form to use to request a determination and release of contributions is available on the ATO website.

The determination will tell you:

  • what maximum FHSSS release amount you can expect
  • what the associated earnings are, and
  • what tax will be withheld.

After the determination you might decide to wait another year to make more contributions or increase associated earnings. If so, you can request another determination from the ATO later. Remember though, you can only apply for a release of funds once. Feel free to contact the ATO if you disagree with its determination.

Once you've received a determination, you'll need to consent to release of the funds. Again, this is conducted with the ATO and not your super fund.

You'll need to:

  • check you have made all of the voluntary FHSSS contributions you want to make and have lodged a notice of intent to claim, and
  • make sure you agree with the amounts shown in the determination. If not, you need to resolve any issues through the ATO's standard review processes for determinations before applying for a release.
  • receive released amounts from the FHSSS before you sign a contract to purchase or construct a home.

When you'd like to release your contributions for your first home, you can apply online to the ATO using your myGov account. Once the ATO determines the amount to be released and you agree to the amount, the ATO will authorise HESTA to release the funds to them.

The ATO will:

  • withhold the appropriate amount of tax, and
  • send the balance of the savings to you.

Only one release of contributions is allowed. If you change your mind or find out there has been a mistake, it may be too late and you won't be able to release any further funds in the future for the purposes of FHSSS.

 

 

is the FHSSS right for you?

Use the government's online estimator to see if the First Home Super Savers Scheme is right for you

The information is general information only and does not take account of your personal financial situation or needs. You should obtain financial advice tailored to your personal circumstances.