First home super saver scheme
Posted on 27th November 2018 by Kelsi Keep
The First Home Super Saver (FHSS) scheme allows you to save money for your first home inside your superannuation fund. The benefits of this can be that:
- Your savings are locked away until you buy a house
- Your earnings in your superannuation fund are taxed at a concessional rate
- Your super fund may offer a higher rate of return than is available to you ordinarily
The FHSS scheme, introduced by the Australian Government in the Federal Budget 2017–18, works as follows:
You make voluntary contributions into your super fund
- Before you make the contributions, you should check with your super fund:
- that they will release the money
- if any fees, charges and insurance may apply
- The contributions you make can be either:
- Concessional contributions (before tax)
- Including salary sacrifice amounts or contributions for which a tax deduction has been claimed, improving cashflow for savings. These contributions are taxed at 15% in your super fund.
- Non-concessional contributions (after tax)
- No tax deduction is claimed for these, and they are not taxed in your super fund.
- Concessional contributions (before tax)
- If your contribution caps allow, you can voluntarily contribute up to $15,000 per financial year that can be eligible for the FHSS scheme, and a total of $30,000 for all years. You should contact your accountant to find out what your contribution caps are.
- You can contribute into any super fund, except defined benefit interest or a constitutionally protected fund.
- You can contribute into more than one fund.
Watch your balance grow
- You can check your balance with your super fund(s) at any time to see how much you have saved.
- This will help you keep track of the maximum FHSS amounts you can have released.
Request a determination
- To withdraw your voluntary super contributions under the FHSS scheme, you need to request a FHSS determination from the Commissioner of Taxation.
- The ATO will tell you your maximum FHSS release amount.
- You can apply online using your myGov account linked to the ATO.
- You can request a determination on more than one occasion.
Request the release of your savings
- If you are ready to purchase your home, you can then decide to apply for a release of your amounts.
- You can apply for a release only once
- You can request a release of the FHSS maximum release amount stated in the FHSS determination or choose a lower amount.
- Once you have requested a release you can’t request another one, even if you have requested an amount less than your FHSS maximum release amount
Receive your amounts
- The ATO will issue a release authority to your super fund(s) requesting your FHSS release amounts
- It will take approximately 25 business days for your fund to release your money and for the ATO to pay it to you.
Sign the contract to purchase your property
- The ATO must have released an FHSS amount to you before you sign a contract to purchase or construct residential premises or you may be liable to pay FHSS tax.
- You have up to 12 months from the time the first amount is released to you to sign a contract to purchase or construct a home.
- If you do not sign a contract to purchase or construct a home within 12 months from the time the first amount is released to you, you can either:
- apply for an extension of time for a maximum of a further 12 months
- recontribute an amount into your super fund/s.
- keep the released amount and be subject to a 20 % FHSS tax.
- You must notify the ATO if you either:
- sign a contract to purchase
- construct a home, or
- recontribute the amount into your super fund, otherwise you will be subject to the FHSS tax.
Lodge your tax return
- The ATO will withhold the appropriate amount of tax on your payment
- A payment summary will be sent to you at the end of the financial year showing your assessable FHSS released amount
- You need to include this amount in your tax return for the financial year you request the release.
- The tax payable on this assessable amount will receive a 30% tax offset.
Who is eligible?
You can start making super contributions from any age, but you can’t request a release of amounts under the FHSS scheme until you are 18 years old, and you:
- have never owned property in Australia – (unless the Commissioner of Taxation determines that you have suffered a financial hardship)
- have not previously requested the Commissioner to issue a FHSS release authority in relation to the scheme
- you either live in the premises you are buying or intend to as soon as practicable.
- you intend to live in the property for at least six months of the first 12 months you own it, after it is practical to move in.
Eligibility is assessed on an individual basis. This means that couples can each access their own eligible FHSS contributions to purchase the same property. If one of you has previously owned a home, it will not stop the other person who is eligible from applying.