First Home Super Saver Scheme (FHSS)

Understanding the FHSS concept

The First Home Super Saver Scheme allows eligible first home buyers to use their superannuation account as a tax-effective vehicle for saving their home deposit. This scheme leverages the favorable tax treatment of superannuation to help accelerate deposit savings.

How FHSS works

You make additional voluntary contributions to your superannuation account beyond the compulsory employer contributions. These voluntary contributions and their associated earnings can later be withdrawn for your first home deposit under concessional tax arrangements.

• Make voluntary super contributions above compulsory amounts
• Contributions and earnings grow in tax-effective super environment
• Withdraw contributions plus deemed earnings for home deposit
• Maximum $15,000 per financial year, $50,000 total per person
• Favorable tax treatment on both contributions and withdrawals

Types of eligible contributions

The scheme accepts both concessional (before-tax) and non-concessional (after-tax) voluntary contributions, each with different tax implications and benefits.

Concessional contributions (before-tax): These include salary sacrifice arrangements and personal deductible contributions that reduce your taxable income and are taxed at only 15% within superannuation.

Non-concessional contributions (after-tax): Personal contributions made from after-tax income where you don't claim a tax deduction, but earnings still benefit from superannuation's tax-advantaged environment.

Tax benefits explained

The scheme's tax advantages come from superannuation's lower tax rates compared to personal marginal tax rates, particularly benefiting higher income earners.

• Contributions taxed at 15% in super instead of marginal tax rates up to 47%
• Investment earnings taxed at maximum 15% instead of marginal rates
• Withdrawal taxed at marginal rate minus 30% (effectively providing significant concession)
• Overall tax saving can be substantial compared to saving outside super

Eligibility and application process

To access FHSS benefits, you must meet specific eligibility criteria and follow the correct application process through the Australian Taxation Office.

• Never owned property in Australia (true first home buyer)
• Australian resident for taxation purposes
• Intend to occupy property as primary residence
• Property purchase contract signed within 12 months of release

Application steps:

1. Make eligible voluntary contributions to complying super fund
2. Apply to ATO for determination of eligible amounts
3. Receive release authority from ATO specifying amounts
4. Apply to super fund for release of determined amounts
5. Use released funds for property purchase within required timeframe

Contribution limits and timing

The scheme has specific limits on contribution amounts and timing that must be carefully managed to maximize benefits while maintaining eligibility.

• Maximum $15,000 per financial year can count toward scheme
• Lifetime maximum of $50,000 per person can be withdrawn under scheme
• Contributions must be made in financial year to count toward that year's limit
• Both members of couple can participate for combined $100,000 potential access

Benefits and strategic considerations

FHSS can significantly accelerate deposit savings for eligible buyers, but requires careful planning and understanding of superannuation rules.

Key benefits:

• Tax-effective savings environment accelerates deposit accumulation
• Government co-contribution may apply to eligible non-concessional contributions
• Forced savings through superannuation system promotes discipline
• Can be combined with other first home buyer assistance programs

Important considerations:

• Funds locked in superannuation until eligible for release
• Complex rules require careful compliance and professional advice
• May impact other superannuation and tax planning strategies
• Withdrawal amounts based on deemed earnings rather than actual investment performance