Saving for your first home with the First Home Super Saver scheme

To give Australians a leg-up in accessing the housing market, the Australian Government introduced the First Home Super Saver (FHSS) scheme – giving you the opportunity to use your super, including investment earnings and potential tax benefits to help save towards a deposit on your first home.

In this article we explore:

• Eligibility criteria
• Contributing to your super
• Withdrawing from your super
• Other considerations
• Seeking advice

  
Am I eligible?
 

The first step when considering whether the FHSS scheme is right for you is determining whether you meet the eligibility criteria:

1. aged 18 years or older
2. have not previously owned property in Australia
3. intend to have your name on the title of the property
4. intend to live in the property for at least six months of the first 12 months that you own it
5. have not previously used the scheme before 

Contributing to save for your first home
 

You can contribute up to $15,000 per financial year to your super with the intention of later withdrawing it under the FHSS scheme.  
 
Any Superannuation Guarantee contributions made by your employer will not count towards this amount.   
 
Eligible contributions include:

• pre-tax contributions including, salary sacrifice or certain voluntary employer contributions  – these are subject to only 15% tax, well below the provisional tax rate many Australians pay. 
• after-tax personal contributions – these aren’t subject to tax, as the money you’re contributing has already been taxed.
• after-tax personal contributions you’ve claimed as a tax deduction – these are subject to 15% tax.

If you make any of these types of contributions, they’ll automatically count towards the amount you can later withdraw under the scheme. They will also count towards the amount you’re able to contribute to your super account each financial year without tax implications – these limits are referred to as contributions caps.

Please note that if the total of your combined income and concessional contributions is more than $250,000 per financial year, any concessional contributions over this threshold will be taxed at 30%. This extra 15% tax is often referred to as 'Division 293 Tax'. Find out more by visiting the ATO's website or by seeking your own tax advice.

For further information on the types of eligible contributions, visit the ATO’s website.

 
Withdrawing your super to buy your first home
 

When you’re ready to purchase your first home, you can make a request to the ATO to withdraw up to $15,000 of additional contributions from each financial year that you’ve contributed, up to a maximum of $50,000 across all years – plus any associated investment returns. 

At the time of withdrawal, the ATO will tell you how much can be released. Typically, you’ll be eligible to receive 85% of the before-tax contributions you’ve made, as well as 100% of the after-tax contributions – plus any associated investment earnings. 
 
When looking to withdraw your super under the FHSS scheme there’s several steps that must be completed. You can find more information on the ATO’s website.

Other considerations
 

Your super is primarily for your retirement
 

Your super is primarily designed to help you save for and fund your retirement. It’s normally only accessible once your reach retirement age. 

If you don’t meet the FHSS scheme’s eligibility criteria or are unable to satisfy any of the other requirements, it’s unlikely you will be able to access any of the contributions you’ve made to your super until you retire or meet another condition of release. 
 

Debts with the ATO and other Commonwealth agencies
 

If you have any debts such as a HECS debt or a tax-bill with the ATO or other Commonwealth agencies, before depositing your released super into your bank account, the ATO may use it to pay the outstanding debt – meaning you may receive less than expected, or even nothing.

Financial advice? Yes, please.
 

Using your super to help purchase a home can be complex and may have tax implications. Prior to adding to your super with the intention of withdrawing under the FHSSS we recommend seeking financial advice. 

As a Mercer Super member, you can access limited financial advice about your Mercer Super account at no additional cost.