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First home super saver scheme

Section: 7.13

The First Home Super Saver Scheme (FHSS) is designed to help Australians boost their savings for a first home by allowing them to a build a deposit inside superannuation, giving them a tax cut.

The FHSSS applies to voluntary superannuation contributions made from 1 July 2017. These contributions, along with deemed earnings, can be withdrawn for a home deposit from 1 July 2018.  For most individuals or couples, the FHSSS could boost the savings they can put towards a deposit by at least 30 per cent compared with savings through a standard deposit account.

Eligibility criteria:

A super fund can release funds under the FHSSS if the member meets the following criteria, even if the member is planning to purchase a property with a partner who does not meet the criteria.

  • 18 years or over
  • never accessed FHSSS
  • never owned a property in Australia

What are the contributions?

A member can contribute to a maximum of $15,000 of their voluntary contributions from any one financial year included in their eligible contributions to be released under the FHSSS, up to a total of $30,000 contributions across all years.

Members can make the following types of contributions to FHSSS:

  • personal non-concessional contributions
  • personal tax-deductible contributions
  • salary sacrifice contributions
  • A member can contribute up to their existing superannuation caps. Amounts released under the FHSSS does not affect the calculation of their concessional or non-concessional contributions for contributions cap purposes. Their contributions still count towards their contribution caps for the year they were originally made.

Releasable amounts

When a member makes a voluntary contributions into super, the order and type of the contributions can make a difference to the amount released under the FHSS scheme.

A member can withdraw their FHSS releasable contributions amount is the sum of their FHSS eligible (100%) non-concessional contributions for the year and 85% of their FHSS eligible concessional contributions (salary sacrifice or personal deductible contributions) for the year.

Associated earnings calculated on these contributions using a deeming rate of return - this is based on the 90 day Bank Bill rate plus three percentage points (shortfall interest charge rate - the SIC rate for the July to September quarter of the 2020-21 financial year is 3.10%pa, and the daily rate is 0.00846994%)

How is it taxed?

A payment summary will be sent to the member at the end of the financial year. It will how their assessable FHSS released amount, which is comprised of:

  • concessional contributions
  • associated earnings on both concessional and non-concessional contributions.

The member is required to include this amount in their tax return in the financial year this was requested. The tax payable on this assessable amount will receive a 30% tax offset.

The ATO will withhold tax that is calculated at either:

  • members expected marginal tax rate, including Medicare levy, les a 30% tax offset
  • 17% if the Commissioner is unable to estimate the expected marginal rate

How the contributions are ordered

In determining which contributions are counted towards an individual's FHSS releasable contributions amount, the ordering rules in TAA Sch 1 s138-30 provide that:

  1. contributions are counted in the order in which they were made, i.e. from earliest to latest, and
  2. if an eligible concessional contributions and an eligible non-concessional contribution are made at the same time, the non-concessional contribution is take to have been made first.
  3. if a member a makes a contributions within a financial year and they claim a deduction for some or all of the contributions, the resulting eligible non-concessional contributions (if any) are taken to be made before any eligible concessional contribution.

The ordering rules in s138-30 can be found in Law Companion Ruling LCR 2018/5

Ineligible contributions

A member cannot include contributions in their FHSS determination that were made by their employer or anyone else on their behalf - for instance, superannuation guarantee amounts and spouse contributions.

Financial hardship provision

A member may still be eligible for the FHSS scheme even if they previously owned a property in Australia, if it was determined they suffered a financial hardship that resulted in a loss of ownership of all property interest. The types of events that could result in the loss of property interests include:

  • bankruptcy
  • divorce, separation from a de-facto partner, or a relationship breakdown
  • loss of employment
  • illness
  • being affected by a natural disaster
  • being eligible for early access to superannuation

To be considered under the financial hardship provision the member can apply online using their MyGov account or by completing a First home super saver scheme-hardship application form.

Last modified: Thursday, September 17, 2020