What is the First Home Super Saver Scheme (FHSSS)?
Owning a home is one of the fundamental Australian dreams. However, with rising property prices and hefty deposits, the dream can feel a little out of reach – this is where the First Home Super Saver Scheme (FHSSS) could help.
The First Home Super Saver Scheme (FHSSS) is a government initiative designed to help eligible first-time home buyers harness their superannuation and withdraw voluntary contributions to save for a deposit faster.
Are you looking to buy your first home and curious to learn more about the FHSSS? Read on and learn how it works.
What is the First Home Super Saver Scheme (FHSSS)?
In a nutshell, the First Home Super Saver Scheme – or FHSSS — allows first-time buyers to make voluntary superannuation contributions and put them towards a home deposit.
If eligible, you could withdraw up to A$50,000 of voluntary contributions (plus associated earnings) to assist you in making the purchase.
It should be noted that ‘voluntary’ contributions refer to additional super contributions made by you such as salary sacrificing or making a post-tax contribution and doesn’t include contributions made by your employer.
How does the FHSSS work?
As mentioned, the FHSS helps first-time home buyers save more efficiently for a deposit, it does this in a few ways.
One way is by utilising certain tax benefits of superannuation to streamline savings. For instance, pre-tax contributions made via salary sacrifice are typically taxed at 15% which is beneficial if lower than your marginal tax rate.
Another way the FHSSS works to boost savings potential is through associated earnings on super contributions when you withdraw them.
Associated earnings refer to a growth rate applied to your contributions and is determined by the Australian Tax Office. This rate is usually higher than a typical savings rate (the associated earnings rate was 7.36% for the July - September 2024 fiscal quarter).
As an example, say you made a once-off voluntary contribution of A$20,000 into your super. After three years at the associated earnings rate, you’d have earned over A$4,000. If you were to then apply for a withdrawal under the FHSSS, you’d be eligible to withdraw the A$20,000 plus the A$4,000 associated earnings.
Keep in mind that the usual annual contribution caps apply. For the 2024–25 financial year, the concessional contributions cap is A$30,000 and the non-concessional contributions cap is A$120,000. There may be ramifications such as a higher tax bill if you voluntarily contribute over this amount.
What is the eligibility criteria for the FHSSS?
To be eligible for the First Home Super Saver Scheme, you must meet the following criteria:
- You must be 18 years or older when making the withdrawal request
- You must not have previously owned property in Australia
- You intend for the property to be your primary residence for a minimum of six months within the first twelve months of the property being deemed occupiable
There are also certain scenarios in which FHSSS eligibility is applicable, such as in times of financial hardship. You can learn more about the eligibility requirements on the ATO website.
FHSSS release and tax implications
Discover an example of a person utilising the first home saver scheme and what the tax implications are:
Concessional Contribution | Non-Concessional Contribution | |
|---|---|---|
Prior to FY 2024/25 | ||
SMSF Member "A" / Individual Tax Payer "A" has made additional contribution towards FHSS scheme | $ 10,000.00 | $ 10,000.00 |
FY 2024/25 - ATO FHSS determination | ||
Upon the FHSS application, ATO will release this contribution and deemed earnings on the contribution: The deemed earnings are calculated @ SIC rate* The current SIC rate is 7.38%** | $ 8,500.00 | $ 10,000.00 |
Assuming taxable income of SMSF Member "A" / Individual Tax Payer "A" in FY 2023/24 was between $120,001 and $180,000.00, i.e. taxed @ 37.00%. The ATO will use this rate as 'expected marginal rate' in their formula to determine FHSS release withholding amount.* ATO will determine tax withholding amount for the Superannuation fund from the FHSS release amount as follows: Amount released × ((expected marginal rate + Medicare levy rate)-30%)** *Tax rates for Australian residents **If ATO could not work out expected marginal rate, then it will use 17%. There will not be any withholding if expected marginal rate + Medicare levy rate is less than 30% | $ 765.00 | $ 900.00 |
FHSS release amount determined by the ATO would be | $ 7,735.00 | $ 9,100.00 |
FY 2024/25 - Individual Tax Return | ||
Assuming SMSF Member "A" / Individual Tax Payer "A" are Australian tax resident, their FY 2024/25 salary is $120,000.00 of which PAYG withheld is $29,220.00, and deductions are $0.00. |
|
|
FY 2024/25 taxable income will be as follows | ||
Salary | $ 120,000.00 | $ 120,000.00 |
FHSS release amount | $ 7,735.00 | $ 9,100.00 |
Assessable income | $ 127,735.00 | $ 129,100.00 |
Deductions | $ - | $ - |
Taxable income | $ 127,735.00 | $ 129,100.00 |
FY 2024/25 tax refund calculation | ||
Tax on Taxable Income (assuming SMSF Member "A" / Individual Tax Payer is Australian tax resident)* | $ 29,108.50 | $ 29,518.00 |
Medicare Levy on Taxable Income | $ 2,554.70 | $ 2,582.00 |
| $ 31,663.20 | $ 32,100.00 |
Non Refundable Tax offset for FHSS | -$ 2,320.50 | -$ 2,730.00 |
| $ 29,342.70 | $ 29,370.00 |
PAYG withholding from salary | -$ 29,220.00 | -$ 29,220.00 |
FHSS tax withholding | -$ 765.00 | -$ 900.00 |
Tax Refundable | -$ 642.30 | -$ 750.00 |
How can I use the FHSSS to buy my first home?
So, now let’s get down to brass tacks. You’ve made enough voluntary contributions to your super fund via one-off contributions and salary sacrificing and now you’re ready to apply for a release under the FHSSS.
Remember, you can release up to A$15,000 from a single financial year’s contributions or up to A$50,000 across all contributed years (from 1 July 2017 onward).
Here’s how it works:
- Head over to your myGov account and apply for an ‘FHSS determination’. The ATO will tell you how much you’ll be eligible to withdraw.
- Submit a formal request to the ATO to release under the FHSSS, you’ll be able to request up to the amount as stated on your FHSSS determination.
- Once released, the ATO will get in touch with your super fund with instructions to release the amount back to the ATO where any applicable tax gets withheld.
- The ATO will then send the money straight to you. This part of the process typically takes between 15 to 25 business days.
From the moment you submit a request, you’ll have 12 months to either sign a contract for an established property or build a home using the FHSSS funds. If you’re unable to enter a contract of purchase in the first 12 months, you can apply for an additional 12-month extension.
There are some tax implications associated with the release of funds under the FHSSS, more on that below.
Completing your tax return under the FHSS scheme
When you withdraw your FHSS savings, the ATO will automatically deduct the applicable tax.
However, as it is a capital event, releasing funds under the FHSSS will impact your assessable income at the end of the financial year. The tax payable on the assessable amount receives a tidy offset.
However, it’s essential to keep all records relating to your FHSS contributions and earnings.
If you have more questions about the FHSSS or about how it all works with an SMSF, you can have a no-committment chat with a Stake Super specialist. Book here.
Speak to a specialist
Want to know more about Stake Super or have questions? Speak to one of our SMSF experts.
First home super saver scheme FAQs
No, Stake Super doesn’t charge any additional fees for using the FHSSS.
Funds released under the FHSSS have an impact on your assessable income. Associated earnings and concessional contributions such as salary sacrifice and voluntary contributions in which you’ve claimed a deduction are taxed at your marginal tax rate – with a 30% tax offset on the amount.
Yes you can. The FHSS is measured on an individual basis, this means if you’re both eligible for the scheme you could both make contributions and request withdrawals individually.
However, if you’re looking to buy property with someone who is not eligible for the scheme, only the eligible individual can make contributions.
If your plans change and you no longer wish to purchase a home, you can leave your FHSS savings in your super account. Alternatively, you can choose to withdraw your contributions – but keep in mind that you may have to pay tax on your withdrawals.
This is not financial product advice, nor a recommendation that a self-managed super fund (‘SMSF’) may be suitable for you. Your personal circumstances have not been taken into account. SMSFs have different risks and features compared to traditional superannuation funds regulated by the Australian Prudential Regulation Authority (‘APRA’). Stake SMSF Pty Ltd, trading as Stake Super, is not licensed to provide financial product advice under the Corporations Act. This specifically applies to any financial products which are established if you instruct Stake Super to set up an SMSF. When you sign up to Stake Super, you are contracting with Stake SMSF Pty Ltd who will assist in the establishment and administration of an SMSF under a ‘no advice model’. You will also be referred to Stakeshop Pty Ltd to enable your trading account and bank account to be set up in order to use the Stake Website and/or App. For more information about SMSFs, see our SMSF Risks page.
Ciara is a Commercial Manager at Stake Super, with over 10 years of experience in the SMSF industry and an MA in Accountancy and Finance from Heriot-Watt University in Edinburgh, United Kingdom. Having previously worked at a chartered accounting firm and one of the largest SMSF administrators in Australia, Ciara has extensive knowledge of SMSF compliance. She is also a current member of the SMSF Association.
