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The First Home Super Saver Scheme (FHSSS), introduced by the Government in the May 2017
Federal Budget, is designed to improve housing affordability. The scheme is intended to help first
home buyers save faster by taking advantage of super’s favourable tax treatment by allowing
you to save money for a first home as part of your superannuation.

 

How does it work?

Since 1 July 2017, you have been able to make voluntary contributions to your super account to save for your first home. Singles can contribute up to $15,000 per year, with a maximum total of $30,000. Couples can double that, contributing up to $60,000 in total over a two-year period (or longer).

Withdrawals can be made from 1 July 2018 and will be taxed at your marginal tax rate less a 30% rebate.

What are the benefits?

Putting your house deposit savings into your super account means you can’t touch it for any other purpose but it also means you may grow your house deposit through the investment earnings made by your super fund.

The Government has suggested that by utilising the scheme you may be able to boost your savings by at least 30% more than if it was deposited in a standard savings account. Both the higher earning rates from the super environment and concessional tax treatment contribute to these benefits.1

Who qualifies for the FHSSS?

The scheme is open to first home buyers over the age of 18 and home buyers who are suffering ‘financial hardship’. The rules surrounding who qualifies under ‘financial hardship’ are yet to be released.

 

 

What sort of home can I purchase under the scheme?

The FHSSS is strictly for the benefit of first home buyers and those experiencing ‘financial hardship’. It’s not for the purchase of an investment property. You must live at the property for a minimum six months out of 12 and move in as soon as you can.

The property can be in the form of a vacant block you intend to build on. However, mobile homes or houseboats don’t qualify.

How can I make the extra contributions?

There are two ways you can make extra contributions:

  • Salary sacrifice contributions from your before-tax salary. You ask your employer to pay a portion of your before-tax salary to your super, instead of paying it to you.
  • Personal after-tax contributions. These are made from your take-home pay after tax has been applied.

When can I start contributing?

Right now. Contributions made from 1 July 2017 can count towards the FHSSS. Your contribution and its deemed earnings can be accessed after 1 July 2018.

How do I access my deposit?

The Australian Taxation Office (ATO) manages the entire process. To withdraw, you apply to the ATO. They calculate the additional earnings and tax payable on the withdrawal and release the money to you from your super fund.

Are there timeframes for buying a house?

Yes. Once the money is released to you, you have 12 months to sign a contract. You also have the option of applying for a 12-month extension with the ATO if things don’t go to plan.

What if I couldn’t buy a house within the timeframe?

The money you withdrew for the house deposit would either need to be re-contributed into your superannuation fund or you’ll be required to pay a 20% tax penalty on the withdrawn amount.

How do I get started? We’re here to help

There are many complexities relating to the FHSSS and it may suit some more than others. It’s important to understand the legislative requirements and the mechanics of how it operates before making any decisions.

If you want to know more about this legislative change and how it can help you, we’ll step you through it. Just contact us.