The First Home Super Saver Scheme (FHSS) is an Australian Government initiative, allowing you to save for your home inside your super, helping first home buyers save faster with the concessional tax treatment of superannuation.
1. How does FHSS work?
The first home super saver (FHSS) scheme was introduced by the Australian Government to reduce pressure on housing affordability. It is designed to allow first home buyers to save towards a home deposit in their super fund.
Under the FHSS Scheme, you can make either before-tax contributions or after-tax contributions to your super account. You can then request a release of the funds when you are ready to buy a home to live in.
To be eligible for the First Home Super Saver Scheme (FHSS) you need to pass the following eligibility criteria.
- You must be a first home buyer
- You must be over 18 at the time of requesting release
- The home you are buying or building must be in Australia
- You either intend to live in the premises you are buying or you intend to move in as soon as practicable
- You intend to live in the property for at least six months within the first 12 months you own it after it is practical to move in
- You haven’t previously used the FHSS scheme.
3. FHSS maximum release limits
You can apply to release your eligible contributions from your super fund of:
- Maximum of $15,000 from any one financial year
- Up to a total of $30,000* across all years.
You will also receive a number of earnings that relate to those contributions, calculated by the ATO.
The rules are per person, so if a couple is both using the FHSS scheme, this means a maximum of $60,000*.
Contributions must be voluntary, so Superannuation Guarantee (SG) amounts paid by your employer cannot count towards your FHSS savings.
4. Determining the available amount
To confirm the amount available for withdrawal, you apply for an FHSS determination through myGov:
- Before signing a contract for your first home; and
- Before applying for the release of your FHSS amounts.
It is possible to apply for an ATO determination to confirm the amount available for withdrawal as many times as you like and it doesn’t trigger the withdrawal until you apply for a release of funds.
5. Applying for a release of funds
You need to first have a determination from the ATO.
You should request the release of your FHSS amount around the same time you start your home buying activities – you don’t have to wait until you sign a contract.
You have 12 months from when you request your release to notify the ATO if you have signed a contract to purchase or construct a home.
If you’ve already received a determination and signed your contract to purchase or construct your home, you must request a release within 14 days of signing the contract.
After you have requested the release, it may take between 15 and 25 business days to process.
You can only request a release once under the FHSS scheme. If your release request is canceled, you will not be able to apply again in the future.
6. Tax benefits
There are a number of tax implications when it comes to the FHSS.
Taxed going in: If you contribute using a salary sacrifice arrangement or as tax-deductible super contributions, the super fund will levy a 15% contributions tax. This 15% tax rate may be lower than the normal marginal tax rate you pay on your income.
Taxed coming out: The FHSS release amount that you eventually withdraw from your fund for the purchase, together with associated earnings, will be subject to withholding tax at your marginal tax rate, less a 30% tax offset. This amount plus the FHSS amount needs to be included in your tax return for the year you request the release.
7. Things to consider
Here are the other things you need to think about.
- Consider your individual circumstances and whether saving for a home deposit in the superannuation environment is right for you
- Check with your employer to confirm they offer salary sacrifice arrangements
- Check with your super fund to confirm they will be able to release the funds and whether extra charges will apply
- Check you are eligible for the scheme
- Consider the limits, timing, and availability of the funds, taking into account where you are at in your home buying journey.
*As part of the 2021-22 federal budget, the Government announced an increase to the maximum release amount for an individual from 1 July 2022 to $50,000. You can learn more about the FHSS scheme at ato.gov.au
Disclaimer: The information provided in this fact sheet is not legal, taxation, or financial planning advice. It has been prepared without considering your specific needs, objectives, and personal financial situation. Before acting on this information, we recommend that you consider carefully if it is appropriate for your needs, objectives, and personal financial situation. All loan products are subject to lender criteria and approval. Fees, terms, and conditions apply.