The First Home Super Saver Scheme: How It Works and Who’s Eligible
The First Home Super Saver Scheme lets first-time home buyers use voluntary contributions in their super fund to build a faster home deposit while enjoying tax benefits. If you are trying to break into Australia’s housing market, this super-based path can lift some of the savings’ pressure without adding to your day-to-day budget strain.
Many home buyers feel stuck juggling rent, rising living costs, and the need to set aside thousands for a deposit. The scheme offers a practical way to grow your deposit inside your super account, where the concessional tax rate is usually lower than your marginal income tax rate. Below you will find a clear explanation of how the saver scheme operates, the eligibility criteria, the key tax considerations, and simple tips that can help you decide whether it suits your financial situation.
How the Super Saver Scheme Turns Super Contributions into a Home Deposit
Before diving into the rules, it helps to see the basic flow:
You make extra before tax contributions (salary sacrifice contributions) or personal after-tax contributions to your super fund.
These eligible voluntary super contributions are tracked by the Australian Taxation Office (ATO) under the FHSS Scheme.
When you are ready to buy a residential property, you submit a release request.
The ATO issues a release authority to your super fund, which then sends the contributions and associated earnings to the ATO.
The ATO withholds any required tax based on your expected marginal tax rate and transfers the balance to your bank account.
You use the money for your first home deposit.
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Why Super Beats a Standard Savings Account
Super earnings are taxed at 15 percent, not at your actual marginal tax rate, which for many workers sits between 19 percent and 45 percent plus Medicare Levy. By routing your savings through super you:
Pay less tax on salary sacrifice contributions.
Enjoy a tax deduction on personal before tax contributions.
Let your deposit benefit from super’s concessional tax environment, boosting the final amount you can withdraw.
Key Contribution Types Inside the Scheme
In this section, you’ll learn about the three main ways to boost your home deposit under the First Home Super Saver Scheme.
Contribution type | Source of funds | Tax treatment when contributed | Amount available at release |
|---|---|---|---|
Salary sacrifice contributions | Redirected from gross pay | Taxed at 15 percent in the fund | 85 percent plus deemed earnings |
Personal after tax contributions | Paid from take-home pay | No contributions tax (you already paid tax) | 100 percent plus deemed earnings |
Personal before tax contributions | Claimable tax deduction in annual tax return | Taxed at 15 percent in the fund | 85 percent plus deemed earnings |
Eligibility Criteria Every First Home Buyer Must Meet
You need to tick several boxes before the ATO will issue an FHSS determination.
Never owned property. You cannot have previously owned a home, investment property, or even vacant land in Australia.
At least 18 years old. Age is assessed on the day you request a determination.
Intend to live in the home. You must move in as soon as practical and stay for at least six months in the first year.
Personal contributions only. Employer contributions (Super Guarantee) do not count toward the saver scheme’s limits, though they still count toward your concessional cap.
For couples, each person is assessed separately. If one partner owned property in the past, the other may still qualify.
Financial Hardship Exception
If you owned property but lost it due to severe financial hardship—such as bankruptcy, job loss, or natural disaster—you may re-qualify. You will need evidence to show the link between the hardship and the loss.
Contribution Limits, Caps, and the Role of Your Marginal Tax Rate
The saver scheme works within normal super caps but adds a special annual and lifetime limit.
Allowance | Limit | How it affects planning |
|---|---|---|
FHSS annual limit | $15,000 per financial year | Maximum voluntary contributions that can count toward the scheme each year |
FHSS lifetime limit | $50,000 total | Maximum total voluntary contributions you can later withdraw |
Concessional contributions cap | $30,000 per financial year (2024-25) | Includes employer contributions plus any salary sacrifice or personal concessional contributions |
Non-concessional contributions cap | $120,000 per financial year | Covers personal after tax contributions |
Because only 85 percent of before tax voluntary contributions can be released, many savers spread their contributions across several years. That strategy:
Keeps them under the annual $15,000 saver limit.
Helps avoid breaching the concessional cap when employer contributions are added.
Allows time for deemed earnings to grow.
Tax Implications: From Contribution to Release Authority
Understanding how and when you pay tax is crucial.
Tax Benefits on the Way In
Salary sacrifice contributions lower your taxable income immediately, so you pay less PAYG withholding during the year.
Personal before tax contributions give you a tax deduction when you lodge your annual tax return, reducing tax payable or boosting a refund.
After tax contributions receive no upfront deduction, but you avoid the 15 percent contributions tax because you already paid income tax.
Deemed Earnings and Tax Withheld on the Way Out
When you lodge a release request, the ATO calculates associated earnings using a set rate—not on your super fund’s past performance. It then withholds tax based on your expected marginal tax rate minus a 30 percent offset. The withheld amount appears in your payment summary and feeds into your assessable income for the year. Depending on your actual marginal tax rate, you may receive a refund or owe extra at tax return time.
FHSS Tax If You Do Not Buy
If you cannot sign a property contract within 12 months (or 24 months with an extension), you must either recontribute the released money to super or pay FHSS tax of 20 percent on the assessable amount.
Step-By-Step Application Process
This section walks through the timeline so you do not miss a deadline.
Make eligible voluntary super contributions. Track amounts carefully.
Apply for an FHSS determination in myGov when you are close to house-hunting. The response is usually instant.
Submit a release request once you are serious about buying. You can do this before or up to 90 days after signing a property contract (14 days for older determinations).
Receive funds into your bank account after the ATO issues the release authority and your super fund sends the money (typically within 15-20 business days).
Purchase the property within 12 months of the release date.
Notify the ATO within 90 days of signing the contract that you have used the funds for your home deposit.
Miss a step and you could trigger extra tax or lose access to the scheme.
Couples, Friends, and Family: Combining Super Saver Balances
Because the FHSS determination is issued per person:
A couple can potentially withdraw up to $100,000 plus associated earnings.
Friends or siblings buying together can each use their own determinations to boost the combined deposit.
Each person must lodge separate determination and release requests and ensure their names appear on the property contract.
Self-Managed Super Fund Members
SMSF trustees can use the saver scheme provided the trust deed allows it and the fund can process a release authority. Trustees must:
Keep accurate records of eligible salary sacrifice contributions and personal contributions.
Apply the same withholding steps as large funds when releasing money.
Ensure no outstanding debt to the ATO delays the release.
Recent Legislative Tweaks You Should Know
From 15 September 2024, important changes took effect:
Longer release request deadline. You now have 90 days after signing a contract to lodge the request.
Ability to amend or cancel a release request before funds are issued, reducing costly errors.
Extra flexibility if you made an unsuccessful attempt under older rules.
Potential Drawbacks and Risks to Weigh Up
Before you decide, it helps to know how the scheme’s limits:
Limited deposit boost. The lifetime cap means the scheme only covers part of a typical metropolitan deposit.
Liquidity trade-off. Money inside super is locked until you buy or reach retirement age.
Complex tax timing. The withholding may not match your actual marginal tax rate, leading to a bill at tax time.
Housing market shifts. Past performance of super investments and property prices may not align with your savings timeline.
Opportunity cost. Extra super contributions reduce cash available for outstanding debt or day-to-day expenses.
Maximising Your Benefits:
These practical tips will help you choose the right contributions and timing to boost your home deposit.
Match Contribution Type to Your Tax Bracket
High earners often gain more from before tax contributions because the gap between their marginal tax rate and 15 percent is greater.
Lower-income savers might prefer after tax contributions so 100 percent is accessible later.
Plan Around Financial Year Boundaries
Make a deposit in late June and another in early July to reach $30,000 of voluntary contributions within a few weeks while staying under each year’s $15,000 limit.
Use Salary Sacrifice for Consistency
A payroll-based strategy removes the temptation to spend money that would otherwise hit your take-home pay.
Keep Good Records
Hold onto pay slips, super statements, and contribution confirmations. Accurate records help if the ATO queries your numbers or you switch employers.
Seek Personal Financial Advice
A licensed financial advisor can review your overall financial circumstances, confirm tax implications, and highlight any cap issues or insurance impacts inside your super account.
Conclusion
The First Home Super Saver Scheme gives first home buyers a simple, tax-friendly way to enhance their deposit using voluntary contributions. By directing eligible salary sacrifice contributions or personal after-tax contributions into your super fund, you may pay less tax now and withdraw more later. But the scheme has strict rules, time limits, and tax steps that require careful attention.
Make sure you understand your eligibility, stay under the annual and lifetime limits, and lodge your FHSS determination, release request, and property notifications on time. We also recommend seeking personal financial advice to ensure the saver scheme aligns with both your home ownership timeline and your broader retirement savings goals.