* Plus up to 2% Medicare levy where applicable.
Another important advantage is that if you make salary sacrifice or tax-deductible contributions to super, those contributions will be taxed at 15% rather than your marginal tax rate, which could result in a significant tax saving, depending on your situation. There are also generally tax concessions when the contributions are withdrawn.
6. What tax is payable when the money is withdrawn?
When you withdraw amounts that were contributed under a salary sacrifice arrangement or as part of a tax-deductible contribution, you’ll have tax withheld from the money you receive.
This money (including any associated earnings) will be taxed at your marginal tax rate (like your employment income), but with a 30% tax offset, which reduces the tax you pay.
If you’ve made personal contributions under the scheme that you’ve not claimed a tax deduction for, no tax will be payable on these amounts when they are withdrawn from super.
Another thing to keep in mind when it comes to tax on super are general contributions caps, as penalties apply if you go over these limits.
7. What other eligibility criteria applies?
- You must be 18 or older to make a withdrawal under the scheme
- You can’t have owned property in Australia before
- You must live in the property for at least six months within the first 12 months after buying
- You must not have previously made a withdrawal request under the scheme
8. What happens when it’s time to withdraw the money?
Here’s what you’ll generally need to do:
- Get a FHSS determination from the ATO to find out how much you can withdraw
- You can request unlimited determinations, but can only make one withdrawal request
- Buy a home or enter into a contract to build a home within 12 months of the withdrawal. Extensions may apply
- If the purchase doesn’t go ahead, within the allowable timeframes, the money may either be put back into super or will incur further tax of up to 20%.
ATO data showed 86% of FHSS release requests were completed within 25 days, according to its most recent data, which was from the 2021-22 financial year2.
9. Where else can first home buyers find information?
Additional rules may apply, so do your research before making any decisions. You can visit the ATO website for further details on the FHSS Scheme.
You may also want to check your state or territory’s First Home Owner Grant information to see what else you may be eligible for.
^ Source: ATO First Home Super Saver Scheme data