Building your super balance
What is the First Home Super Saver Scheme?
The First Home Super Saver Scheme (FHSSS) is a government initiative intended to help first home buyers save for their first home. It allows you to save for your first home by making eligible personal contributions to your super account, taking advantage of the concessional tax treatment within super.
From 1 July 2018, to assist in purchasing your first home, you may be able to withdraw eligible voluntary super contributions made to your account since 1 July 2017, plus associated earnings on these amounts (at a set rate, determined by the ATO), opens in new window. Limits apply to the amounts you can voluntarily contribute into super and also to the amounts you can withdraw through the FHSSS.
Benefits of the FHSSS
According to the Department of the Treasury, the FHSSS could increase the deposits of first home buyers by 30% compared with saving through a standard deposit account1.
Investments with your super
By using your super account to save for a home, investments earnings on your savings are only taxed at up to 15%.
Investments outside your super
By using your super account to save for a home, investments earnings on your savings are only taxed at up to 15%. Compared to investments outside super which are taxed at your marginal tax rate (up to 47%2), you may be able to reduce the tax you pay on your investment earnings.
Also, if you make eligible voluntary concessional contributions, you may be able to effectively reduce the amount of tax you pay on your salary and wages- also increasing the net benefit of participating in the scheme when compared to investing your take home pay outside super.
What do you need to consider?
You can contribute up to $15,000 each financial year, up to a maximum of $30,000, under the FHSSS.
For couples this is up to $30,000 per annum, with a maximum of $60,000.
Limits apply to the amount you can contribute to super at concessional tax rates. Limits also apply to the amount you’re able to release under the scheme, so you should consider this before making any contributions to your account for the purpose of the FHSSS.
Contributions made under this scheme must be made within the existing concessional and non-concessional caps. You do not need to notify your fund that these contributions are being made for the purpose of this scheme, however it may be important to check with your fund whether or not they will accept a Release Authority from the ATO to release your funds under the FHSSS.
There are rules that restrict access to superannuation. It is important to remember that once you have made contributions to super (including voluntary contributions), you will have to satisfy certain requirements to be able to access this money again. If for example you decide not to purchase a home, you may not be able to access your money until you retire or meet certain other conditions.
We recommend speaking to a financial adviser and learning more at ato.gov.au, opens in new window.
How much can I have released?
You can apply to have a maximum of $15,000 of eligible voluntary contributions from any one financial year included in your eligible contributions to be released under the FHSS scheme, up to a total of $30,000 contributions across all years. You will also receive an amount of associated earnings that relate to those contributions.
Up to 100% of eligible non-concessional contributions and 85% of eligible concessional contributions may be withdrawn from the scheme, up to the above limits.
The ATO will calculate the associated earnings on your voluntary contributions using a deemed rate of return which is based on the 90-day Bank Bill rate plus three percentage points (shortfall interest charge rate).
Am I eligible?
Your eligibility will be determined by the ATO. You should confirm your eligibility before making any voluntary contributions into super for the purpose of saving for your first home.
As a guide from the ATO, to be eligible to make withdrawals under the FHSSS you must:
- you must be aged 18 or older (at the time of request for determination)
- you must not have previously requested a release from super under the FHSSS
- the voluntary contributions mustn’t be held in a defined benefit scheme, and
- you mustn’t have previously owned property in Australia3, including investment or commercial properties.
The eligible property must be purchased within 12 months of withdrawing your funds under the FHSSS. You’ll need to in live in your new home for at least six of the first 12 months you own it (or after it is practical to move in). You must also let the ATO know once this occurs.
You’re unable to access your super using the FHSSS to purchase any premises not capable of being occupied as a residence, a houseboat, a motor home, or vacant land.
To determine your eligibility and other taxes and rules that may apply please visit ato.gov.au.
Easy ways to add to your super
You can make a one off contribution or set up regular after-tax contributions via:
- Bpay - login to get your reference number and biller code
- Via payroll
to make an after-tax contribution, or download and complete the contributions form.
How do I withdraw through the FHSSS?
To apply to release funds under the FHSSS you need to submit a request using an approved form to the ATO. They’ll determine your eligibility and the amount you can withdraw, and if you agree with the ATO’s determination, you can request that they issue a release authority to your super fund. Your super fund will send the requested release amount to the ATO. The ATO will withhold the appropriate amount of tax (generally your marginal tax rate less a 30% tax offset for concessional contributions and total associated earnings) and send the funds to you.
It is important to note that you must receive the released super amounts from the ATO before you sign a contract to purchase or construct residential premises.
If funds are released to you, but you don’t apply them for the allowable purposes highlighted above, you will either need to re-contribute the funds released to you (less any tax withheld) to superannuation as a non-concessional contribution (within the ordinary non-concessional limits), or if you keep the amount released (or don’t tell the ATO that you have made a re-contribution of the required amount back to super or have purchased a home) you will need to pay additional tax.
See ato.gov.au for more information.
This information has been prepared without taking into account any particular person’s objectives, financial situation or needs. Before deciding to make a contribution to your super, interested persons should consider the appropriateness of this information having regard to their personal objectives, financial situations or needs.
1 References Department Treasury, Budget 2017-18 Fact Sheet 1.4, 27 September 2017: https://treasury.gov.au/housing-affordability/
2 Includes Medicare Levy
3 You may still be eligible if you have previously owned property in Australia, if the Commissioner of Taxation determines that you have suffered a financial hardship. Please visit ato.gov.au for more information.