How the First Home Super Saver Scheme (FHSSS) can fast-track your deposit

It’s harder than ever for first-home buyers in Australia, with sky-high property prices and deposits that feel unreachable. But what if there was a way you could grow your deposit faster? Enter: the First Home Super Saver Scheme (FHSSS). This government initiative allows first-home buyers to withdraw eligible parts of their super fund as a tax-effective way to save up to $50,000 of their home deposit.

While it might seem complicated, it’s actually quite simple – let's break it down.

What is the FHSSS and how can it help you?

If you’re aged 18 or over and are an eligible first-home buyer (which generally means that you’ve never owned any Australian property before), the FHSSS allows you to withdraw voluntary super contributions that you've made since 1 July 2017 to put towards a home deposit. There’s more on eligibility criteria below. 

Under the FHSSS, first-home buyers, who have made voluntary super contributions of up to $15,000 per financial year into their super, can withdraw these amounts (plus associated earnings/less tax) from their super fund to help with a deposit on their first home.

If you’re eligible, the maximum amount of contributions that can be withdrawn under the scheme is broadly $50,000 for individuals.

What counts as a voluntary super contribution?

• Salary sacrifice contributions (concessional contributions) 
  These are contributions you can get your employer to pay you out of your before-tax income if you choose to, which are on top of what your employer might pay you under the super guarantee, if you’re eligible.

• Tax-deductible super contributions (concessional contributions)
  These are contributions you can make (such as when you transfer funds from your bank account into your super) that you then claim a tax deduction for.

• Personal super contributions (non-concessional contributions) 
  These are contributions which you can also make by transferring funds from your bank account into super, but which you don’t claim a tax deduction for. 

Voluntary super contributions don’t include the compulsory super guarantee contributions your employer is required to make into your super fund, if you’re eligible. Spouse contributions (which are those that your partner may choose to put into your super fund) also can’t be withdrawn under the scheme.

How does the scheme benefit first-home buyers?

Super is generally taxed at a lower rate than money invested in your own name, the FHSSS intends to help first home buyers to grow their deposit more quickly. 

When money is withdrawn under the FHSSS, amounts that were contributed as before-tax or tax-deductible contributions are taxed at your marginal tax rate, less a 30% tax offset, while amounts that are contributed as after-tax contributions aren’t subject to additional tax. Note, tax will also apply to the associated earnings. 

How do I withdraw contributions under the scheme?

To make a withdrawal under the scheme, an application to the Australian Taxation Office (ATO) will be required, and an eligible person is only allowed one FHSSS withdrawal in their lifetime.

What else should I be aware of?

1. Before you can request a withdrawal, you must first get a ‘determination’ from the ATO using your myGov account. The determination tells you how much you can withdraw under the scheme. You can ask for as many determinations as you like but can make only one withdrawal request.

2. You must buy residential premises. This includes vacant land (if you’re planning to build), but not any premises that can’t be occupied as a residence, and not a houseboat or motor home.

3. You’ll need to buy a home or land to build on within 12 months of withdrawal. You can ask the ATO to extend this to 24 months if required.

4. FHSSS amounts that are withdrawn and not subsequently used for a property purchase must be put back into super as after-tax contributions, or penalties will apply.

5. The first-home buyer must live at the property for at least six months in the first 12-month period from when it can be occupied.

6. The maximum amount you can withdraw under the scheme is $50,000 (plus earnings). There are also annual contributions caps in place you should be aware of.

7. It’s important to understand that the money you save through the scheme mightn’t be enough for a full deposit to buy your first home, but you could combine it with other methods of saving to potentially help you get there faster.

8. The ATO will assess the  amount of contributions you can release based on the sum of:

- 100% of your non-concessional contributions, and

- 85% of your concessional contributions

9. Additional rules may apply to your situation, so make sure you do your research before making any decisions.

Where can I go for more information?

If you’re potentially looking to purchase something soon and would like to speak to an AMP Bank home loans specialist, you can request a call back or phone AMP Bank on 1300 534 325.