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The First Home Super Saver Scheme (FHSSS) is an Australian Government initiative aimed at helping first-home buyers save for their first property purchase. It was introduced in the 2017-18 federal budget. Under the FHSSS, you are using your super either as a deposit or as genuine savings, to help buy your first home. The scheme allows you to make voluntary contributions to your superannuation and use those contributions, plus whatever returns they generate, to help make a deposit on your first home. As of July 2022, each person applying for a home loan can save and withdraw up to $50,000 (plus associated earnings) from their super fund to help buy a home under the FHSSS (meaning couples buying a home together can save and withdraw a total of $100,000, plus associated earnings. In this article, we will cover the eligibility requirements for the First Home Super Saver Scheme (FHSSS), its benefits, how to make contributions, and the process to apply for the scheme. We also highlight how you can get early access to super due to financial hardship and provide alternatives to the FHSSS that first-home buyers can explore.

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What Are The Eligibility Criteria For The FHSSS?

To be eligible for the First Home Super Saver Scheme, you must:

• Be 18 years or older.
• Be a first-home buyer who has never owned property in Australia.
• Live in the property you buy for at least six months within the first 12 months you own it.
• Not have made an FHSSS release request.

Do I Have To Be An Australian Citizen?

No. You don’t have to be an Australian citizen or an Australian resident for tax purposes to use the FHSSS.

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Early Access To Super Due To Financial Hardship

You can access your super if you are experiencing severe financial hardship. You will have to talk to your super fund to request early access due to financial hardship. There are no special tax rates. If you are under 60 years old, withdrawals are taxed between 17% and 22%. If you’re over 60 years old, you won’t be taxed unless the lump sum includes an untaxed element.

Who Is Eligible For Early Access To Super Due To Financial Hardship?

• If you’re under the preservation age plus 39 weeks and:
  • You’ve received eligible government income support payments continuously for 26 weeks.
  • You cannot meet reasonable and immediate family living expenses.
  • The minimum amount you can withdraw is $1,000.
  • The maximum amount you can withdraw is $10,000.
  • If your super balance is less than $1,000, you can withdraw the remaining balance after tax.
  • You have not made a withdrawal in the last 12 months.

• If you’ve reached the preservation age plus 39 weeks:
  • You’ve received eligible government support continuously for 39 weeks.
  • You were not gainfully employed at the time of applying.
  • There are no restrictions on the withdrawal amount.

Note: Your preservation age is the age when you can access your super if you’re retired, or are starting to transition to a retirement income stream.

How To Apply?

You will have to apply directly to your super fund. The ATO will not process any hardship requests. You can call Services Australia to request a letter from them. The letter will outline if you’ve met the requirements for financial hardship and is valid for 21 days. You will need to give the letter to the super fund within 21 days so they can come to a decision on whether you can access your super early.

What Are The Benefits Of The FHSSS?

The First Home Super Saver Scheme (FHSSS) offers several benefits to first-home buyers, including tax concessions and a higher rate of return on savings. Some of the key benefits of the FHSSS are:

• Tax savings: Contributions made under the FHSSS are taxed at a lower rate than savings outside of super.
• Joint use: If you’re applying with a partner, the two of you can withdraw a combined total of $100,000 as a deposit towards the same house.
• Withdrawal flexibility: The amount you can withdraw is not affected by falling markets. As long as there’s enough in your account, you can withdraw.
• Concessional contributions: As both before-tax and after-tax contributions are allowed, you can save for your first home more effectively.

How To Make Contributions To The FHSSS

There are two ways you can make eligible contributions to the FHSSS:

• 1. Enter a salary-sacrifice arrangement with your employer to make voluntary concessional contributions.
• 2. Make voluntary personal contributions, which will be concessional if you claim an income tax deduction.

What Are Ineligible Contributions?

The following contributions are ineligible and cannot be included in the determination of your FHSSS balance:

• Your employer’s compulsory contributions
• Contributions required by workplace agreements or unions
• Voluntary contributions made by others on your behalf
• Money transferred from another person’s super
• Government co-contributions
• Amounts received due to legal settlements
• Contributions related to capital gains tax concessions
• Transfers or rollovers of amounts from other superannuation funds are generally not eligible.
• Contributions that exceed the annual concessional (before-tax) and non-concessional (after-tax) caps

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Process For FHSSS Release For Property Purchase

You will need to apply with the ATO to receive your FHSS amounts for property purchase. It’s a two-step process:

• 1. Apply for an FHSSS determination
• 2. Apply for a release

You must have an FHSSS determination before you sign a contract to buy property.

Applying For FHSSS Determination

Requesting a Determination

• If you don’t have a myGov account, create one and link it to the ATO.
• Log in to myGov and select the Australian Taxation Office.
• Navigate to Super, then Manage, and finally First Home Saver.

FHSSS Determination Application

• When applying for an FHSSS determination, your maximum release amount will be provided.
• Include only eligible contributions in the request.
• Use the dates your super fund received the contributions.
• Verify and, if necessary, correct pre-filled contribution details in the online request.
• If adding non-pre-filled contributions, confirm dates, amounts and types using your super fund statement or transaction list.

Tips When Requesting FHSSS Determination

• You must determine contribution years based on the date contributions were received by your super fund, not the payment date.
• Avoid using payslips for the FHSSS determination request, as they don’t indicate the contribution receipt date.
• Contributions will be cross-checked with data your super fund reported, and evidence may be required before release.
• Specify the year and amount of any super tax deductions for your tax returns.
• Incorrect information may delay or cancel your FHSSS request.
• Multiple determination requests are allowed, but a release can be requested only once.

Applying For FHSSS Release

Release Application Process

• Request a release of your FHSSS amount after obtaining a determination.
• Only one release application is allowed.
• Confirm in the release application that no further tax deductions will be claimed on non-concessional contributions in the determination.

Tips When Applying For A Release

• Once a release is requested, no additional requests are permitted, even if the amount requested is less than the FHSSS maximum release amount.
• Ensure you’ve completed all desired voluntary FHSSS contributions before requesting a release.
• If any eligible contributions were omitted, request a new determination before signing a property purchase.
• Choose to request the FHSSS maximum amount or opt for a lower amount.
Upon a valid release request, a release authority is issued to your super fund. The super fund must send your FHSSS release amount to the Australian Taxation Office (ATO). Typically, it takes between 15 and 20 business days for your super fund to release the money and for the ATO to transfer it to you. Once the amount is released, you have up to 12 months from the date of release to buy your first home with it.

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What Are The Tax Implications?

Under the FHSSS, tax implications of contributions and withdrawals are as follows:
• Contributions: Concessional (before-tax) contributions are taxed at a flat rate of 15% inside the super fund. For example, if you salary-sacrifice $15,000 into your super, the super fund will pay tax on it at a flat rate of 15%, which equates to $2,250, leaving $12,750 after tax in the fund.
• Withdrawals: When the after-tax contribution is withdrawn, it is taxed at the individual’s marginal tax rate, less a tax offset of 30 percentage points. For instance, if an individual’s marginal tax rate is 32.5%, the tax offset of 30 points would equate to a 2.5% tax charge on the withdrawn amount.

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What Other Government Schemes Or Incentives Are There?

The First Home Super Saver Scheme is one of the many first-home buyer schemes the Australian Government offers. The other schemes and grants available for first-home buyers in Australia are:
• Home Guarantee Scheme
• Help to Buy
• Shared-Equity Scheme
• First Home Owner Grant
• Stamp-Duty Exemptions
While the Home Guarantee Scheme and Help to Buy are nationwide schemes, the others are administered by the relevant state or territory government.

Aspect	FHSSS	Home Guarantee Scheme	Help to Buy	Shared-Equity Scheme	First Home Owner Grant	Stamp-duty Exemptions
What is it?	Facilitates saving for first home through voluntary super contributions	Assists first-home buyers with a deposit as low as 2%	Provides equity assistance to eligible first-home buyers	Provides equity assistance to eligible first-home buyers	Provides financial assistance for first-home buyers	Eliminates the need to pay all or some of stamp duty.
Tax Benefits	Contributions receive tax benefits	No specific tax benefits	No specific tax benefits	No specific tax benefits	No specific tax benefits	No specific tax benefits
How it works	Funds can be withdrawn for home purchase	Enables purchase with a low deposit, government guarantees the rest	Equity assistance is provided in the form of a shared ownership arrangement	Equity assistance is provided in the form of a shared ownership arrangement	Funds are typically paid during the purchase of the property	Exemptions or discounts are applied during property purchase

FAQS: First Home Super Saver Scheme

What Kind Of Home Can I Buy?

You can buy only a residential property under the First Home Super Saver Scheme. The types of property you can buy are:

• Existing house
• New house
• Vacant land with contract to build

When Can I Withdraw My Savings?

You can withdraw your super savings within 12 months from the date you made your release request. Within this time, you will also have to buy or build a home.

What If I Can’t Find A Property Right Away?

If you cannot purchase a property within 12 months of the release date of the super, you have two options:

• Contribute the money back to your super account
• Pay extra tax on the amount withdrawn. This removes the tax benefit you get from the FHSSS.

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Should You Get The FHSSS?

The First Home Super Saver Scheme (FHSSS) can be a beneficial program for Australians looking to save for their first home. By making voluntary contributions to their super, individuals can take advantage of the concessional tax treatments and save for a deposit faster. However, there are both pros and cons to consider. There are restrictions on contribution and withdrawal limits, and it can be a complex process to navigate. It’s essential to carefully weigh the potential benefits against the limitations and seek professional advice to determine if the FHSSS is the right option for your financial situation. The mortgage experts are here to help. Call us on 1300 889 743 or enquire online today.

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