Understanding the First Home Super Saver Scheme (FHSSS)

The First Home Super Saver Scheme (FHSSS) is an Australian Government program designed to assist eligible first home buyers to save for a home deposit in a tax-effective manner through their superannuation accounts.

Introduced to ease property affordability pressures, the scheme allows first-time buyers to grow voluntary super contributions, both before-tax (concessional) and after-tax (non-concessional), with concessional taxation and then withdraw these, plus deemed earnings, to put towards their first home.

Property Ownership Exclusions

Eligibility and Property Ownership Exclusions

Applicants must be at least 18 years old and have never previously owned any interest in real property in Australia. This criterion includes all property types such as residential homes, investment properties, vacant land, commercial property, leasehold interests, and company title properties. This broad ownership exclusion ensures the scheme supports genuine first-time home buyers across all property categories.

The home purchased or constructed using FHSS funds must be located in Australia and be used as the applicant’s principal place of residence for at least six months within the first 12 months after settlement or completion. The applicant's name must also be on the title of the property.

Contribution Limits and Caps

From 1 July 2022, eligible individuals can voluntarily contribute up to $15,000 per financial year and may accumulate a total of up to $50,000 in FHSS contributions across all years. Couples buying together can combine their FHSS amounts for up to $100,000 when accessing funds. These voluntary contributions are subject to existing superannuation contribution caps, including concessional and non-concessional limits.

Accessing Funds and Reapplication Restrictions

When ready to buy or build a first home, applicants apply to the Australian Taxation Office (ATO) through the myGov portal for a FHSS determination, which calculates the release amount comprising contributions plus deemed earnings. Once released, funds must be used within 12 months to purchase or build the home. The ATO may grant a one-time extension of an additional 12 months on application.

If the funds are not used within this period, the applicant must either recontribute the withdrawn amount to superannuation (which is exempt from contribution caps) or pay a specific FHSS tax equal to 20% of the withdrawn amount. This tax is a penalty to discourage misuse and is distinct from ordinary income tax treatment.

Applicants can access the scheme only once in their lifetime — no reapplication or multiple withdrawals are permitted, irrespective of circumstances.

First Home Super Saver Scheme: Tax Advantages and Benefits

Using the FHSSS provides considerable tax advantages. Contributions made to super receive concessional tax treatment at 15%, generally lower than the personal marginal tax rate. The earnings credited to these voluntary contributions are also taxed concessionally, meaning your savings grow more effectively than typical savings accounts. Withdrawals by first home buyers are taxed at marginal rates with offsets, often resulting in overall tax savings, helping accelerate home deposit growth.

The First Home Super Saver Scheme continues to be an important tool for Australian first home buyers, offering a structured, tax-effective savings mechanism to help meet deposit requirements sooner. Understanding all eligibility conditions, ownership restrictions, contribution caps, and withdrawal rules is essential to maximise the scheme's benefits and avoid penalties.

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(GENERAL INFORMATION ONLY)

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