Buying a first home in Australia has become increasingly challenging with rising property prices.
The First Home Super Saver Scheme offers a way to save for a deposit using superannuation contributions while taking advantage of lower tax rates.
This government program allows eligible first home buyers to access up to $50,000 of their voluntary super contributions to help purchase or build their first home.
The scheme works by letting individuals make extra voluntary contributions to their super fund, with up to $15,000 counting per financial year towards the total $50,000 limit.
These savings plus associated earnings can then be withdrawn when ready to buy.
The funds benefit from the concessional tax treatment of superannuation, which means contributions are taxed at just 15% rather than at marginal income tax rates.
This tax advantage can help savings grow faster compared to a standard savings account.
Understanding the rules, eligibility requirements and contribution limits is essential before starting to save through this scheme.
The process involves specific steps from making eligible contributions through to requesting a determination and release of funds, all of which must occur before property settlement.
Key Takeaways
- The First Home Super Saver Scheme allows eligible Australians to save up to $50,000 in voluntary super contributions to buy their first home.
- Contributions benefit from lower tax rates of 15% on concessional contributions and can include both salary sacrifice and personal after-tax contributions.
- Buyers must request a determination before property ownership transfers and meet occupancy requirements to use the scheme successfully.
What Is the First Home Super Saver Scheme?
The First Home Super Saver Scheme (FHSSS) is an Australian Government program that helps first home buyers save a deposit faster through their superannuation fund.
The scheme uses the tax advantages of super to help people build their deposit more quickly than a regular savings account.
Key Features and Purpose
The FHSS scheme allows first home buyers to make extra voluntary contributions into their super fund.
These contributions can later be withdrawn to use as a home deposit.
The Australian Taxation Office administers the program.
Voluntary contributions made from 1 July 2017 onwards count towards the scheme.
People can withdraw up to $15,000 from any one financial year and $50,000 in total across all years.
The main benefit is lower tax rates.
Concessional contributions through super are taxed at only 15%.
This rate is usually less than a person’s marginal income tax rate.
The scheme can potentially boost savings by around 30% compared to a standard savings account.
The program includes both the contributions and deemed earnings when calculating withdrawal amounts.
This means the money can grow while sitting in the super fund.
History and Legislative Background
The Australian Government introduced the First Home Super Saver Scheme in 2017.
The program started accepting eligible contributions from 1 July 2017.
The government made changes to the scheme in the 2021 Federal Budget.
These changes aimed to make the program more attractive to people trying to enter the property market.
The scheme forms part of broader government efforts to help first home buyers.
It works alongside other first home buyer programs and incentives.
Who the Scheme Is For
The FHSS scheme targets Australians buying their first home.
Both the person making the contributions and any co-purchasers must meet the first home buyer requirements.
People need to plan ahead to use the scheme effectively.
They must make voluntary contributions to their super fund before they can access the money.
The program suits people who have time to build up contributions before purchasing.
The scheme works best for people whose marginal tax rate is higher than 15%.
These individuals get the most benefit from the tax savings that super contributions offer.
Eligibility Criteria and Important Conditions
The FHSS scheme has strict rules about who can use it and how.
Understanding these requirements before making contributions helps avoid delays or disqualification when requesting funds.
Age and Residency Requirements
Applicants must be 18 years old or older when requesting a FHSS determination.
The scheme accepts contributions made before turning 18, but these can only be accessed once the age requirement is met.
Australian citizenship is not required to participate.
The scheme is available to both Australian residents and non-residents for tax purposes.
This means temporary visa holders and foreign workers can use the FHSS scheme to purchase their first home in Australia, provided they meet all other eligibility criteria.
Property Ownership Restrictions
The scheme is strictly for first home buyers who have never owned property in Australia.
This includes any type of property such as investment properties, vacant land, commercial property, company title interests, or leases of land.
Each person’s eligibility is assessed individually.
This means couples, siblings, or friends can each access their own eligible FHSS contributions to purchase the same property together.
If one person has previously owned property, it does not stop others who qualify from applying for their own FHSS amounts.
The applicant’s name must appear on the property title.
The scheme cannot be used to purchase vacant land by itself, houseboats, motor homes, or premises not capable of being occupied as a residence.
However, a contract for construction of a home on vacant land is permitted, provided ownership has not transferred before applying for a FHSS determination.
Intention to Occupy and Timeframes
Applicants must genuinely intend to occupy the property as their home as soon as practicable after purchase.
The scheme requires living in the property for at least six months out of the first 12 months from when it becomes practicable to move in.
The purchase contract must be signed within 12 months from the date of requesting a FHSS release.
Extensions may be granted in certain circumstances.
A FHSS determination must be requested before ownership of any real property transfers, which generally occurs at settlement.
Once ownership has transferred, eligibility to request a determination ends.
Financial Hardship Provisions
Individuals who have previously owned property may still qualify if they have experienced FHSS financial hardship.
The ATO assesses these applications on a case-by-case basis.
Financial hardship circumstances include divorce, separation, loss of employment, serious illness, or natural disaster.
These situations must have resulted in the person losing ownership of their previous property or experiencing significant financial difficulty.
Applicants seeking a financial hardship exemption must provide evidence supporting their claim.
The ATO evaluates whether the circumstances genuinely prevented the person from maintaining property ownership or participating in the property market as a first home buyer.
Contributions: Types, Limits and Caps
The First Home Super Saver scheme relies on voluntary super contributions made from 1 July 2017 onwards.
Understanding which contributions count and how much can be contributed each year determines how much someone can ultimately withdraw for their first home deposit.
Voluntary Contributions Explained
Voluntary contributions form the foundation of the FHSS scheme.
These are additional amounts deposited into super beyond the compulsory Super Guarantee contributions that employers pay.
Only voluntary contributions qualify for the scheme.
There are two main types: concessional contributions (taxed at 15% in the super fund) and non-concessional contributions (after-tax amounts not taxed in the fund).
The scheme excludes Super Guarantee contributions entirely, along with employer-mandated contributions under awards or industrial agreements.
Ineligible contributions also include:
- Contributions made before 1 July 2017
- Spouse contributions
- Government co-contributions
- Contributions splitting amounts
- Excess contributions beyond the caps
Anyone who has eligible contributions in their super fund can access them under the scheme, provided they meet all other requirements.
The contributions don’t sit separately in the super account.
They remain part of the overall super balance if not withdrawn.
Salary Sacrifice Contributions
Salary sacrifice contributions are a popular way to save under the FHSS scheme.
These are amounts deducted from pre-tax salary and paid directly into super.
The contributions are taxed at 15% in the super fund, which is typically lower than a person’s marginal income tax rate.
When withdrawn under the scheme, only 85% of salary sacrifice contributions count towards the maximum release amount.
The 15% difference accounts for the tax already paid in the super fund.
Each financial year, someone can contribute up to $15,000 in eligible contributions.
If someone salary sacrificed $25,000 in one year, only $15,000 would count as eligible FHSS contributions.
Of that $15,000, only $12,750 (85%) would count towards the calculation of the maximum releasable amount.
Personal Contributions and Tax Deductions
Personal contributions are amounts paid directly into super from a person’s bank account.
These can be either concessional or non-concessional, depending on whether a tax deduction is claimed.
Personal contributions claimed as a tax deduction become concessional contributions.
They’re taxed at 15% in the super fund, and 85% can be withdrawn under the scheme.
Personal contributions not claimed as a deduction are non-concessional contributions.
These aren’t taxed in the super fund, and 100% can be withdrawn under the scheme.
The ordering rules favour non-concessional contributions.
When someone makes both types on the same day, the non-concessional contribution is counted first.
This maximises the release amount since 100% of non-concessional contributions count, compared to 85% of concessional contributions.
Contribution Caps and Compliance
The FHSS scheme has specific contribution limits separate from standard superannuation contribution caps.
The limits are $15,000 per financial year and $50,000 in total across all years since 1 July 2017.
Both concessional and non-concessional contributions count towards these limits at their full value.
Someone who contributed $10,000 through salary sacrifice and $5,000 as personal contributions in one year would reach the $15,000 annual limit.
Contributions that exceed the standard superannuation contribution caps become ineligible for the FHSS scheme.
These caps are separate limits that apply to all super contributions regardless of the FHSS scheme.
Excess concessional or non-concessional contributions can’t be used under the scheme, even if they would have been eligible before being identified as excess.
Super funds must be contacted to verify which contributions are eligible.
This helps track progress towards the $50,000 total limit and ensures compliance with both FHSS limits and standard contribution caps.
How Savings Grow: Tax Treatment and Associated Earnings
The First Home Super Saver Scheme offers two main ways to grow savings faster than a standard savings account: concessional tax treatment on contributions within the superannuation fund and a guaranteed rate of return through associated earnings calculations.
Super Fund Growth and Associated Earnings
Associated earnings under the FHSS scheme are calculated differently from actual investment returns in a superannuation fund.
The ATO uses a notional amount based on the shortfall interest charge rate, not the real earnings from investments.
This guaranteed calculation method provides certainty about growth rates.
First home buyers know exactly how much their eligible contributions will earn, regardless of how their super fund actually performs in the market.
The deemed earnings apply to both concessional and non-concessional contributions.
These earnings form part of the maximum release amount when someone requests their FHSS savings.
The calculation begins from when contributions are made and continues until the release date.
Tax Benefits and Offsets
Concessional contributions receive significant tax advantages through the superannuation system.
These salary sacrifice amounts or personal contributions claimed as tax deductions are taxed at only 15% within the super fund.
This rate is typically lower than most people’s marginal tax rate.
When funds are released, the assessable FHSS amount receives a 30% tax offset.
This offset reduces the tax payable on the released amount, making the scheme more financially beneficial than saving through standard taxed income.
The combination of lower contribution tax rates and the release tax offset can boost savings by approximately 30% compared to a regular savings account.
However, the tax withheld on release must be included in the annual tax return for the year the release request is made.
Assessable Income and Marginal Tax Rates
The assessable FHSS released amount impacts tax obligations but receives special treatment in certain areas. While it must be reported in the tax return, it’s not counted as assessable income when calculating family assistance or child support payments.
The benefit of contributing through superannuation depends largely on marginal tax rate. Someone earning a higher income faces a higher marginal tax rate, making the 15% concessional contribution tax rate more advantageous.
The difference between their marginal rate and the 15% super fund rate represents immediate tax savings. Non-concessional contributions receive no tax deduction when contributed but aren’t taxed in the superannuation fund.
When released, 100% of these after-tax contributions can be accessed, compared to 85% of concessional contributions. The ATO provides a payment summary showing both the assessable amount and tax withheld for inclusion in the annual return.
Withdrawals: The Step-By-Step FHSSS Process
You must request a FHSS determination before you withdraw any funds, and this needs to happen before property ownership transfers to you. The ATO processes both the determination and release in separate steps, with specific timing requirements for signing contracts and receiving your money.
Applying for a FHSS Determination
You need to log in to ATO online services through myGov to start the process. Select Super, then Manage, then First home saver to access the determination request form.
The determination shows your maximum release amount before you commit to a property purchase. This includes 100% of your eligible non-concessional contributions, 85% of your concessional contributions, and associated earnings calculated at the shortfall interest charge rate.
You can request a FHSS determination multiple times if your circumstances change. Each determination remains valid, but you can only complete one release request.
The ATO typically processes determinations within 15 to 20 business days, though this can vary during busy periods.
Making a Release Request and Authority
After receiving your FHSS determination, you need to submit a release request through the same myGov portal. This step tells the ATO you want to access your funds.
The ATO will issue a release authority to your super fund once they approve your request. Your fund then has up to 25 business days to release the money to the ATO.
The ATO withholds tax based on your marginal tax rate minus the 30% FHSS tax offset before sending the remaining amount to your nominated bank account. You must submit your release request before property settlement occurs.
The release authority goes to all super accounts that hold your eligible contributions.
Receiving Your FHSSS Release Amount
The ATO transfers your FHSSS release amount to your bank account after receiving the funds from your super account and calculating the tax withheld. This process can take several weeks from when you submit the release request.
You will receive a payment summary from the ATO. You must include both the assessable amount and tax withheld in your tax return for the year you made the request.
The FHSSS release amount does not count towards calculating family assistance or child support payments. If you have an outstanding debt with the ATO or another Commonwealth agency, your release amount may be offset against this debt.
This could reduce your payment to zero and delay how long it takes to receive your funds.
Meeting Property Contract and Usage Deadlines
You must sign a contract to purchase or construct a home within 12 months of requesting your FHSS release. The contract can be for vacant land with a home construction agreement, but you cannot own the land before requesting your determination.
You need to occupy the property as your home as soon as practicable after purchase. You must live in it for at least 6 months out of the first 12 months from when it becomes practical to move in.
These requirements ensure the scheme helps people buy homes to live in rather than investment properties. You must notify the ATO within 28 days of signing your property contract.
If you do not sign a contract within the required timeframe, you may need to recontribute the released amount back into your super account or pay additional tax.
Additional Considerations and Risks
The FHSS scheme involves complexities beyond basic eligibility and contribution limits. First home buyers need to understand how bankruptcy affects their application, what happens when mistakes occur, and when professional guidance becomes necessary.
Bankruptcy and Legal Complications
Bankruptcy significantly impacts a person’s ability to access FHSS funds. If someone declares bankruptcy after making contributions but before requesting a release, their trustee in bankruptcy may have control over those superannuation funds depending on the specific circumstances.
The timing of bankruptcy matters considerably. Contributions made whilst bankrupt or undischarged may face scrutiny from trustees.
These funds could potentially form part of the bankrupt estate rather than remain accessible for home purchase. Legal complications also arise when multiple parties purchase property together.
If one co-purchaser has previously owned property, it doesn’t affect another person’s eligibility. However, each buyer must independently meet all FHSS requirements.
Family Court orders or other legal disputes involving property ownership can create additional complications that may affect someone’s first home buyer status.
Errors, Amendments and Returning Funds
Mistakes in FHSS applications can cause delays or rejection. Common errors include claiming ineligible contributions, incorrect dates, or mismatched details between super fund records and ATO records.
The ATO may cancel a determination request if it contains ineligible amounts. If someone releases FHSS funds but doesn’t proceed with purchasing a home, they must return the money.
They have 12 months from the date they requested the release to sign a contract (or longer if the ATO approves an extension). Failing to purchase within this timeframe means the released amount must go back into superannuation, and a re-contribution may count towards contribution caps.
Changes in circumstances require prompt notification to the ATO. This includes deciding not to purchase property or discovering previous property ownership that makes someone ineligible.
Seeking Financial Advice
The FHSS scheme suits some buyers better than others. Financial advice helps determine whether using superannuation for a home deposit makes sense based on individual circumstances.
Factors to consider include current income, tax rates, existing savings, and long-term retirement plans. Professional advisers can calculate the actual tax benefit someone receives from the FHSS scheme.
They also assess whether reducing superannuation balance now will significantly impact retirement savings later. The 30% tax offset on assessable FHSS amounts provides benefits, but these vary depending on marginal tax rates.
Super funds may charge fees for processing FHSS releases. Financial advisers help buyers understand these costs and whether they outweigh potential tax savings.
Independent financial advice becomes particularly important for people with complex financial situations or those unsure about their eligibility.
Frequently Asked Questions
How does the First Home Super Saver Scheme assist with saving for a deposit?
The scheme allows first home buyers to make voluntary contributions into their superannuation fund to save for a home deposit. These contributions receive concessional tax treatment, with contributions taxed at 15% in the super fund instead of marginal income tax rates.
The scheme works by combining eligible contributions with associated earnings. Buyers can access 100% of their non-concessional contributions and 85% of their concessional contributions when ready to purchase.
The tax savings and investment earnings mean savings can grow faster than in a standard savings account. Associated earnings are calculated using the shortfall interest charge rate and added to the withdrawal amount.
What are the eligibility criteria to participate in the First Home Super Saver Scheme?
Participants must be 18 years or older when requesting a determination. They must have never owned property in Australia, including investment properties, vacant land, commercial property, land leases, or company title interests.
The buyer’s name must appear on the property title. They can only make one completed release request per determination.
Couples, siblings, or friends can each access their own eligible contributions to purchase the same property. If one person has previously owned a home, it won’t prevent others who meet the eligibility criteria from applying.
The property must be in Australia and used as the buyer’s primary residence. Buyers must genuinely intend to occupy the property as soon as practicable and must live there for at least 6 of the first 12 months after it becomes practical to occupy.
Can voluntary contributions be made towards the First Home Super Saver Scheme, and if so, what are the limits?
Participants can make voluntary contributions up to $15,000 in any single financial year. The total contributions across all years cannot exceed $50,000.
Eligible contributions include salary sacrifice amounts, personal voluntary contributions claimed as tax deductions (concessional contributions), and personal after-tax contributions not claimed as deductions (non-concessional contributions). All eligible contributions must be made on or after 1 July 2017.
Superannuation guarantee contributions from employers don’t count toward the scheme. Government co-contributions, contributions from spouses or family members, and excess contributions beyond caps are also ineligible.
Contributions for the scheme aren’t tracked separately in super accounts. If a buyer doesn’t withdraw them for a home purchase, they remain part of their super until they meet another condition of release, such as retirement.
What is the process for withdrawing funds under the First Home Super Saver Scheme to purchase a home?
Buyers must first request a determination from the Australian Taxation Office before ownership of any real property transfers to them. This typically means applying before property settlement occurs.
The application is made through ATO online services via myGov. Buyers select Super, then Manage, then First Home Saver to access the application form.
After receiving the determination, buyers must request a release of the super savings. The determination shows the maximum amount available for withdrawal based on eligible contributions and associated earnings.
Buyers need to sign a contract to purchase or construct a home within 12 months of requesting the release, or up to 24 months if they apply for an extension. They must notify the ATO when they sign a contract or if they decide not to proceed with a purchase.
Those needing funds before Christmas should apply online by 17 November, as ATO offices close from midday 24 December 2025 until 2 January 2026. Applications submitted after 17 November may not be finalised before the office closure.
Are there any specific tax implications to be aware of when using the First Home Super Saver Scheme?
The assessable portion of the release amount affects income tax. The ATO provides a payment summary, and buyers must include both the assessable amount and tax withheld in their tax return for the year they request the release.
Released amounts benefit from a 30% tax offset. However, the assessable amount isn’t included in calculations for family assistance and child support payments.
Outstanding debts with the ATO or other Commonwealth agencies may be offset against the release amount. This could reduce the payment amount, potentially to nil, and will delay the release.
Concessional contributions are taxed at 15% in the super fund, which is typically lower than marginal tax rates. Non-concessional contributions aren’t taxed in the super fund.
How does the First Home Super Saver Scheme interact with other first home buyer grants and concessions?
The scheme operates independently of other government assistance programs for first home buyers. Participants can use the scheme alongside other grants and concessions available through state and territory governments.
The scheme doesn’t prevent buyers from accessing programs like the Help to Buy Scheme or state-based stamp duty concessions. Each program has its own eligibility criteria that must be met separately.
Buyers should check with participating lenders and state revenue offices to understand how different programs work together. Some programs may have specific requirements about deposit sources or property types.
