Have you ever wondered how to use your superannuation to save for your first home?

If you’re trying to save for a first home deposit, you might want to take advantage of the First Home Super Saver Scheme (FHSSS).

If you’re eligible, this scheme allows you to make voluntary contributions of up to
$30,000 and withdraw this amount (plus earnings, less tax) to buy your first home.

Benefits of saving for your home deposit through super

Tax savings: Before-tax contributions (such as salary sacrifice) are taxed at 15% going into your super. This rate is generally lower than your income tax rate, which can be as high as 45%, plus the Medicare and other applicable levies.

You could also make an after-tax contribution, then claim a tax deduction before lodging your tax return to reduce your income tax for that financial year.

Potentially higher earnings on your savings through the super system. You could earn a higher return on your savings if the deemed rate, which is determined by the Australian Taxation Office (ATO), is higher than the interest you get in your regular savings account or term deposit or other investments. The deemed rate for the quarter ending March 2020 is 3.91%. 

Are you eligible?

You are eligible for the First Home Super Saver Scheme if you:

  • are aged 18 years or older
  • have never owned property or land in Australia
  • live or intend to live in the premises you are buying as soon as practicable after purchase, or intend on living in the property for at least six of the first 12 months you own the property, after it is practicable to move in; and
  • haven’t previously withdrawn funds as part of the scheme.

If you’ve owned property in Australia before but experienced financial hardship that resulted in the loss of the property, you may still be eligible to participate in this scheme, if you receive approval from the ATO.

You can do this by applying for a ‘determination’ to the ATO to find out the maximum amount that can be released under this scheme. 

How does the First Home Super Saver Scheme work?

There is no need to create a separate account - any voluntary contributions you’ve made into your super from 1 July 2017 could be eligible as part of the scheme.

There are limits – you can contribute up to a maximum of $15,000 per financial year and a maximum of $30,000 in total to use towards your deposit. If you’re a couple, you can both take part individually - so together you can save up to $60,000.

For further detail, read our fact sheet:

Read the first home super saver fact sheet

How do I withdraw my money?

Once you’re ready to withdraw your savings, you need to apply to the ATO. You can do this online through your MyGov account. The ATO will then determine your eligibility and advise the amount that can be released as part of the scheme, which, subject to the yearly and total limits, can be:    

  • 100% of your after-tax amounts
  • 85% of concessional before-tax amounts (because 15% contributions tax is applied when your money goes into the fund).

They will then arrange for your funds to be paid to you from your super fund.

It will take approximately 25 business days for us to release your money and for the ATO to pay it to you.

When your savings are withdrawn from super, any before-tax contributions and investment earnings will be taxed at your marginal tax rate minus a 30% tax offset. For example, if your marginal tax rate is 32.5%, the 30% tax offset means that you’ll only pay 2.5% tax during withdrawal. If you made after-tax contributions, no tax will be deducted on these contributions.

You then have 12 months from the date you made your release request to sign a contract to purchase or build a home.

If you don’t make it in time, you can either:

  • apply to the ATO for a 12-month extension, or
  • recontribute the money into your super, or
  • keep the money, but it will be subject to an additional flat tax rate equal to 20% of the assessable FHSS released amount.

Ways to contribute to your super

You can make any voluntary contributions (before or after-tax) of up to a maximum of $15,000 per financial year to count towards the scheme. You can do this until you reach the maximum cap of $30,000 for this scheme.

Please note, we must have your tax file number (TFN) on file to accept any voluntary contributions.

Before-tax contributions: This needs to be set up with your employer, there are two quick and easy ways to you can do this:

  1. Use the pre-populated email template to request salary sacrifice with your employer
  2. Download the salary sacrifice form (just complete the form, print it off and hand it to your employer)

Note, there is an annual cap of $25,000 for before-tax contributions. This limit is inclusive of the compulsory Super Guarantee (SG) contribution made by your employer. 

After-tax contributions: The quickest way to contribute is via BPAY. You can get your unique BPAY details by logging into your account online or via our app.

Note, there is an annual cap of $100,000 for before-tax contributions (or $300,000 over a three-year period, if you are aged under 65).

You can claim a tax deduction on your after-tax contribution - this would provide you with the same tax benefit as the before-tax contribution. You must put the claim in before you lodge your tax return for that financial year.

Note, if you’re claiming a tax deduction on your after-tax contribution, the annual contribution cap of $25,000 applies. This limit is inclusive of the compulsory SG contribution made by your employer. 

To claim, complete this Notice of intent to claim a tax deduction form and send it to us. You can either email your filled-out form to enquiries@firststatesuper.com.au or post it to:

First State Super

PO Box 1229

Wollongong NSW 2500

Once we receive your form, we can adjust the tax on your contribution to the lower rate of 15%. You will then receive a letter from us acknowledging that this has taken place.

You must receive this acknowledgement before you can claim the deduction on your tax return.

Things to consider

It’s important to make sure that this scheme is right for you, so before you participate you may like to consider: 

  • The type of home you want to live in. The scheme only allows you to buy ‘residential premises’ with your savings. This excludes houseboats, motor homes, or any premises that can’t be occupied as a residence, such as vacant land, unless it is to build your home.
  • Investment earnings on your FHSSS amount are calculated by the ATO, not the performance of your super fund.
  • Although the before-tax part of the money released to you from the FHSS scheme will be included in your total taxable income, the money will not be included in other income tests by the ATO. This means that withdrawals are not included in the calculation of any repayments you need to make for HECS or HELP debts, or in the income tests used to calculate social security entitlements.
  • You are not able to withdraw:
    * Voluntary contributions that exceed the annual caps of $25,000 for before-tax and $100,000 for after-tax contributions
    * Mandated employer contributions, such as Super Guarantee (SG) or other contributions that form part of an industrial award or enterprise agreement
    * Spouse contributions
    * Government co-contributions.

We’re here to help

If you want to know how the First Home Super Saver Scheme could work for you, we can help.

Our superannuation advisers can take the guesswork out of the technical stuff and answer your questions about the scheme. Best of all, you don’t pay any extra for our simple advice service – it’s all part of your fund membership.

Book your appointment