The First Home Super Saver Scheme (FHSSS or FHSS scheme) is a good way to save for a home deposit faster using the favourable tax treatments of superannuation as well as returns that are generally/usually better than most traditional savings accounts!
You can have up to $15,000 of your voluntary contributions each year – a total of $30,000 over your lifetime – applied to the FHSSS. Not only will the contributions be taxed at 15% - lower than most people’s marginal rate – but you’ll also receive investment earnings on your contributions!
- You must be 18 years of older to withdraw FHSSS funds.
- You have never owned property in Australia before, unless there has been a financial hardship that forced you to give up the property i.e. a drought or fire that caused relocation.
- Have not previously requested a FHSSS release of funds.
Buying with a spouse, partner, family member or friend
Eligibility for the FHSSS is assessed individually. This means that couples, siblings or friends can each access their own eligible FHSSS contributions to purchase the same property.
If you’re buying a home with someone who has already purchased a home (i.e. you have never owned a home but your partner has), you are still allowed to use the FHSS scheme.
How to contribute
There are several different ways to get FHSSS contributions to your superannuation fund, including:
What to do before you get started
- Ensure your fund can take contributions and will release the money (we do).
- Ask your fund about any fees and charges that may apply.
- Review how FHSSS fund withdrawals will influence your tax situation.
How to release your savings
Before you request the release, ensure that you’ve made all the FHSSS contributions you want to make and agree with the determination from the ATO.
You can request a release of the maximum FHSSS amount or a lower amount; however once you’ve made a request you cannot make another.
The request to release is done through the ATO and can be accomplished using your MyGov account.
How much interest will the FHSSS contributions accrue?
The investment earnings of FHSSS contributions are determined by the ATO. Earnings are calculated using a “deemed rate of return,” or a flat rate that is less sensitive to market volatility.
The return is based on the 90-day Bank Bill rate plus 3 percentage points, known as the shortfall interest charge (SIC).
In other words, don’t expect to be able to salary sacrifice into a high-growth investment option and gamble on a large return from a high-risk investment option.
What do I do with the FHSSS funds once they’re released?
When you’re ready to purchase a home, you must request that the funds be released prior to entering into a contract to purchase or construct your first home. The release can take a bit of time – the ATO estimating around 25 days or longer – so plan well in advance.
Once the funds are released, you have 12 months to enter into a contract. If there are issues, you will have to file for an extension or recontribute the FHSSS funds into your super fund.