What is the First Home Super Saver Scheme (FHSSS)?

Of course, there are many different ways to save a first home deposit. The benefit of doing it within your super is that you may end up paying less tax, which means you can save a deposit faster.  

You can actually save on tax in two ways.  

Firstly, you only pay of up to 15% tax on whatever earnings your super contributions make. Outside of super, in another type of investment account, you would have to pay your marginal tax rate on those earnings.  

Secondly, if you make before-tax super contributions (such as salary sacrifice contributions), you’ll only have to pay 15% on those contributions as well – and you’ll reduce your taxable income by the total amount of your contributions.     

The higher your marginal tax rate, the more you can potentially save. 

You can take as long as you want to save a first home deposit with the FHSSS. When you’re ready, you can withdraw up to $15,000 of the contributions you made each financial year with a maximum total withdrawal amount of $50,000 plus associated earnings. 

If you’re buying a home with your partner, they can use the FHSSS as well. That means you could potentially withdraw up to $100,000 plus associated earnings to put towards your first home.  

While the FHSSS is intended for first home buyers, there’s an exception for people who have experienced financial hardship that resulted in them losing a property they owned. 

This might be due to: 

• bankruptcy 
• divorce 
• separation from a de-facto partner 
• a relationship breakdown 
• loss of employment 
• illness 
• a natural disaster. 

The best way to find out if you’re eligible for the FHSSS financial hardship provision is to contact the ATO directly. You’ll have to provide evidence as part of your FHSSS application that shows how the hardship event resulted in you losing your property.  

Regardless of whether the additional super contributions you’re making for your home deposit come from your before-tax income (concessional contributions) or after-tax income (non-concessional contributions), the contribution caps still apply. 

The total amount of concessional contributions you can make in a year is $27,500. For non-concessional contributions, it’s 110,000 per year. However, there are some instances where you may be able to make contributions above this amount. 

Making larger concessional or non-concessional contributions 

When you withdraw money that you made as a concessional contribution (e.g. salary sacrifice contributions), the ATO will deduct tax from the amount they pay to you. This is because these contributions were made from your before-tax income, so you haven’t paid income tax on that amount. However, it won’t be as high as your marginal tax rate. The money (including any associated earnings) will be taxed at your marginal tax rate including the Medicare levy, but with a 30% tax offset. 

When you withdraw money that you made as a non-concessional contribution (e.g. a personal contribution that you didn’t claim a tax deduction for), the ATO won’t deduct any tax from the amount they pay to you. This is because you already paid tax on that money.