First Home Super Saver scheme

What is the FHSS scheme?

The First Home Super Saver (FHSS) scheme enables you to use your super savings to buy a house. It lets you make voluntary contributions to your superannuation, which you can later withdraw to put towards a deposit, helping you buy your first home sooner.

A key benefit of buying your home with super is it can also help boost your savings. Let’s find out how.

Benefits of the FHSS scheme

While earnings on investments – such as interest earned on savings account balances in your own name are taxed at your marginal tax rate (which may be up to up to 47%), earnings on investments in your super fund accumulation account are eligible for a concessional tax rate of 15%.

Depending on market conditions, your super savings may earn more than they would in a regular savings account.

Eligibility criteria

To be eligible to use your super to buy a house under the FHSS scheme, you must:

• not have owned property in Australia before
• be aged 18 years or older; and
• have not previously had an amount released from superannuation under this scheme.

Eligibility is assessed on an individual basis. For more information on eligibility, visit the ATO’s page on the FHSS Scheme, opens in new window.

How the FHSS scheme works

If you’re looking to access your super to buy property as part of the FHSS scheme, it’s worth keeping in mind that only voluntary contributions made into your super account (from 1 July 2017) will be available to you. Eligible contributions include:

• salary sacrifice contributions
• personal contributions
• voluntary employer contributions (does not include mandatory employer contributions such as Super Guarantee).

The type of voluntary contributions you make into super will affect the maximum release amount. You can withdraw 100 per cent of your eligible non-concessional (after-tax) contributions and 85 per cent of eligible concessional (pre-tax) contributions.

Non-eligible contributions

Certain types of contributions are not eligible to be withdrawn under the FHSS scheme, including:

• compulsory employer contributions (example: Superannuation Guarantee)
• spouse or child contributions
• government co-contribution
• contributions made by another individual or entity on your behalf (except where your employer makes additional contributions for you under an agreed salary sacrifice arrangement), and
• voluntary contributions to defined benefit funds or constitutionally protected funds.

Super withdrawals under the FHSS scheme

All contributions to super will count towards the ordinary contribution caps that apply. The maximum amounts you’re able to contribute (within the ordinary caps) and withdraw as part of the FHSS scheme are:

• $15,000 per financial year, and
• $50,000 in total.

You’ll also be able to access associated earnings (calculated by the ATO based on a set rate  on eligible contributions that you withdraw.

Applying to withdraw your funds

If you’ve made eligible voluntary contributions, you meet other eligibility rules, and you wish to apply to access your super funds to buy a home, you’ll need to follow some important steps.

First, you’ll need to request a determination from the ATO directly, which will tell you how much you’re eligible to withdraw from super under the scheme. You can then make an application to the ATO to withdraw an amount.

It’s also important to be aware that there are some important timing requirements that relate to when you need to submit your application for a determination and withdrawal from the ATO and when you’re able to sign a contract.

Also, once your funds are released, there are some additional obligations you’ll have, which include:

• entering into a contract to purchase or build your home within 12 months (may be extended by the ATO)
• notifying the ATO once you’ve entered into a contract, or

As well as meeting these obligations, you must:

• occupy (or intend to occupy) the property as soon as it's practical to do so, and
• live in the property for at least six of the first 12 months you own it (from when it's practical to do so).

If you don’t enter into a contract within the required timeframe, you’ll need to either recontribute the funds to superannuation, or pay additional ‘First Home Super Saver Tax’. You won’t be eligible to apply for a release in the future under the scheme.

Find more information on the FHSS scheme, opens in new window. You may also wish to confirm with your super fund that they will participate in the scheme.