First Home Super Saver Scheme Explained

The First Home Super Saver Scheme, or FHSS, lets eligible first home buyers save through super and later apply to release some of those voluntary contributions, plus associated earnings, to help buy or build a home in Australia.

For some people, it can be a smart way to save for a deposit. For others, the benefit may be smaller than expected. It really depends on your income, your timeline, and whether you can follow the rules properly.

Written by Alan O'Reilly, an Irish and Australian qualified financial adviser based in Melbourne.

The main attraction is the tax treatment. Eligible concessional contributions are generally taxed at 15 percent inside super, which is often lower than a person’s marginal tax rate. That can make the saving process more efficient. But FHSS is not just a tax idea. It is a rules based process. Timing matters. Contribution type matters. The release process matters too.

If you want to estimate what the scheme could look like in your own case, you can use my First Home Super Saver Scheme calculator.

Table of contents

• Key takeaways
• What is the First Home Super Saver Scheme?
• Who is the FHSS scheme for?
• How the FHSS scheme works
• What contributions count under FHSS?
• How much can you withdraw under the FHSS scheme?
• A simple FHSS example
• Tax treatment in plain English
• Is the FHSS scheme worth using?
• Common misunderstandings
• What home can you buy under FHSS?
• Before using FHSS, what should you check?
• Final thoughts
• FAQs

Key takeaways

• The FHSS scheme lets eligible first home buyers use some voluntary super contributions, plus associated earnings, to help buy or build a first home in Australia.
• You can count up to $15,000 of eligible voluntary contributions from any one financial year and up to $50,000 across all years.
• Eligible non concessional contributions count at 100 percent. Eligible concessional contributions count at 85 percent.
• You must request a FHSS determination before ownership of real property transfers to you. In practice, that usually means before settlement.
• The property must be one you genuinely intend to live in.
• FHSS can be worthwhile, but it is not automatically the best option for everyone.

What is the First Home Super Saver Scheme?

FHSS is an ATO administered scheme that allows eligible people to make voluntary contributions into super, then later apply to release some of those amounts to help with their first home.

It is important to be clear on what it is not.

It is not a way to access your whole super balance. It is not a way to withdraw employer super guarantee contributions. And it is not separate money sitting in a special FHSS pocket inside your fund. The relevant contributions stay inside your super account until you apply through the ATO.

In plain English, the process works like this:

1. You make eligible voluntary contributions to super.
2. The ATO uses contribution information reported by your fund.
3. You request a FHSS determination.
4. You request a release.
5. The ATO receives the money from your fund, withholds tax where required, then pays the net amount to you.
6. You then need to buy or build an eligible home within the required timeframe, or recontribute the amount if you do not proceed.

Simple enough in theory. A bit more involved in practice.

Who is the FHSS scheme for?

At a high level, FHSS is for adults who have not previously owned property in Australia and want to save for a first home to live in.

To use the scheme, you generally need to satisfy all of the following:

• you are 18 or older when requesting a FHSS determination
• you have never owned property in Australia before
• your name will be on the title of the property you buy
• you have not already made a completed FHSS release request
• you genuinely intend to live in the property as your home

The ATO assesses eligibility on an individual basis. So if two eligible buyers purchase together, each person may be able to access their own FHSS amount.

There is also a financial hardship pathway for some people who previously owned property and lost it because of hardship. That is a more specific area and needs to be considered carefully.

If you want the full breakdown, including what counts as previous ownership and what types of contributions are eligible, read First Home Super Saver Scheme eligibility.

How the FHSS scheme works

The FHSS process has five main stages, from making the right contributions through to buying your home or dealing with the outcome if your plans change. None of the steps are especially hard on their own. The trick is getting the order right.

Step 1: Make eligible voluntary contributions

The scheme only applies to eligible voluntary contributions made on or after 1 July 2017.

These can include:

• salary sacrifice contributions
• personal contributions you claim as a tax deduction
• personal after tax contributions that you do not claim as a deduction

This is one of the most misunderstood parts of FHSS.

Not all super contributions count. Employer super guarantee contributions do not count. Government co contributions do not count either. Spouse contributions made for you do not count. So before relying on FHSS, it is worth checking that the contribution type you are making is actually eligible.

One practical point here. If you make a personal after tax contribution and want to claim a tax deduction for it, you need to lodge a Notice of Intent to Claim a Deduction with your fund before you request a FHSS determination. If that step is missed or done too late, the contribution will not be treated as concessional.

Step 2: Stay within the FHSS limits

For FHSS purposes, you can count:

• up to $15,000 of eligible voluntary contributions from any one financial year
• up to $50,000 of eligible voluntary contributions across all years

Then the contribution type matters.

When the ATO works out your maximum releasable amount, it includes:

• 100 percent of eligible non concessional contributions
• 85 percent of eligible concessional contributions
• associated earnings

Associated earnings are not based on your fund’s actual investment return. The ATO calculates them using a deemed rate called the shortfall interest charge rate, which is based on the 90 day Bank Bill rate plus 3 percentage points.

So if you make a $15,000 eligible non concessional contribution, the full $15,000 can count before associated earnings are added. If you make a $15,000 eligible concessional contribution, only $12,750 counts before associated earnings.

Step 3: Request a FHSS determination

Before you can request a release, you need a FHSS determination from the ATO.

This tells you your maximum FHSS release amount based on the contributions reported and accepted.

You can request a determination more than once, provided you still meet the eligibility rules and have not already requested a release. That can be useful if you need to correct information or include later contributions.

Step 4: Request a release

Once you have a determination and want to access the money, you can request a release.

You can only make one FHSS release request, so this step deserves care. You can request any amount up to your maximum FHSS release amount.

There is also a timing point that catches people out. Once the determination is issued, you generally have 60 days to request the release unless the Commissioner allows more time. If you are not ready by then, it may be better to request a new determination later rather than sitting on the old one for too long.

The ATO then asks your super fund or funds to send the money to them. From there, the ATO withholds tax where required, offsets certain government debts if relevant, and pays the remaining amount to your bank account.

Step 5: Buy or build an eligible home

After the release request, you need to sign a contract to purchase or construct an eligible home within the required timeframe, unless you recontribute the relevant amount to super.

This is where many people need to slow down and be careful. The process is manageable, but it is not something to leave to the last minute.

If your plans fall through, there are really three paths:

• buy or build within the required timeframe
• recontribute the relevant amount to super
• keep the money and pay FHSS tax

That FHSS tax is a flat 20 percent of your assessable FHSS released amount. In practice, the usual 12 month window can generally be extended by another 12 months.

If you want the detailed timing rules, contract windows, and common errors, read First Home Super Saver Scheme withdrawal.

What contributions count under FHSS?

Eligible contributions can include:

• voluntary concessional contributions, such as salary sacrifice
• personal deductible contributions
• personal after tax contributions you have not claimed as a deduction

Ineligible contributions include:

• employer super guarantee contributions
• contributions made before 1 July 2017
• spouse contributions made for you
• government co contributions
• contributions splitting amounts
• various other excluded contribution types

A simple rule of thumb is this: FHSS is built around your own eligible voluntary contributions, not the compulsory super contributions your employer already pays.

How much can you withdraw under the FHSS scheme?

Your maximum FHSS release amount is made up of:

• your eligible contributions, subject to the FHSS limits
• associated earnings deemed by the ATO

The key limits are:

• up to $15,000 of eligible voluntary contributions from any one financial year
• up to $50,000 across all years

And when calculating the releasable amount:

• eligible non concessional contributions count at 100 percent
• eligible concessional contributions count at 85 percent
• associated earnings are added

That means the amount available for release depends not just on how much you contributed, but also on what type of contribution you made.

If you want to test your own numbers, use my First Home Super Saver Scheme calculator.

A simple FHSS example

Let’s say Mia wants to buy her first home.

Over two financial years, she makes these eligible voluntary contributions:

• Year 1: $10,000 salary sacrifice
• Year 2: $15,000 personal after tax contribution that she does not claim as a deduction

For FHSS purposes:

• the $10,000 salary sacrifice contribution counts at 85 percent, so $8,500 counts
• the $15,000 non concessional contribution counts at 100 percent, so the full $15,000 counts
• associated earnings are then added

Before associated earnings, Mia has $23,500 counted toward her potential release amount.

Real life can be a bit messier than this. Multiple funds, reporting delays, or incorrectly classified contributions can all cause issues. That is why checking the details matters before you hit the release stage.

Tax treatment in plain English

This is often where FHSS becomes attractive.

Eligible concessional contributions are generally taxed at 15 percent in the fund. For many people, that is lower than the tax they would otherwise pay on that income outside super.

When you later request a FHSS release, the assessable FHSS released amount is included in your assessable income for the financial year in which you requested the release. You also receive a 30 percent FHSS tax offset.

That does not mean the whole release is tax free. It means the tax treatment is concessional, not exempt.

There is also an important difference between the assessable amount and the cash that lands in your bank account. The ATO may withhold tax before the money is paid to you. At the end of the financial year, you receive a payment summary showing:

• the assessable FHSS released amount
• the tax withheld

Both need to be included in your tax return for the year you requested the release, even if you actually receive the money in the next financial year.

That point is easy to miss.

Is the FHSS scheme worth using?

Sometimes yes. Sometimes not really.

FHSS can be useful where you still have time to save, your income means concessional contributions create a real tax benefit, and you are comfortable following the process properly.

It may be less compelling if you are very close to buying, your likely benefit is modest, or you would rather keep full flexibility over your savings outside super.

That decision deserves its own discussion, so I cover it separately here: Is the First Home Super Saver Scheme worth it?

Common misunderstandings

A few issues come up again and again.

Thinking employer contributions count

They do not. FHSS is based on eligible voluntary contributions.

Leaving the process too late

You must request a FHSS determination before ownership of real property transfers to you. In practice, that usually means before settlement.

Using the wrong date for contributions

The relevant date is when the contribution is received by the super fund, not when it left your pay or bank account.

Assuming you can release money more than once

You can request more than one determination, but you can only make one FHSS release request.

What home can you buy under FHSS?

The scheme is for buying or building residential property in Australia for you to live in as your first home.

You must genuinely intend to occupy the property as soon as practicable after purchase and live in it for at least 6 of the first 12 months from when it is practicable to occupy it.

The scheme cannot be used to purchase:

• a houseboat
• a motor home
• premises not capable of being occupied as a residence

The ATO also says you cannot use the FHSS scheme to purchase vacant land. However, the contract can be for the construction of a home on vacant land, provided ownership of the vacant land has not transferred to you before applying for a FHSS determination and the relevant conditions are met.

Before using FHSS, what should you check?

Before making this part of your deposit strategy, I would check:

• that your contribution type is eligible
• that your super fund will release FHSS amounts
• that your details with the fund and the ATO match
• that your timeline allows enough room for the determination and release process
• that you understand the tax treatment
• that the scheme is actually worth using in your situation

That last one matters most. A tax benefit sounds nice on paper. But the best strategy is the one that actually fits your life.

Final thoughts

The First Home Super Saver Scheme can be a useful way to save for a first home, especially if voluntary super contributions improve the tax efficiency of the journey.

But it is not just about saving into super and hoping for the best.

You need the right contribution type. You need the right timing. And you need to understand the release process before you are deep into the property search.

If you want to see what it could look like in your own case, start with my First Home Super Saver Scheme calculator.

You can also keep reading the rest of this cluster:

• Is the First Home Super Saver Scheme worth it?
• First Home Super Saver Scheme eligibility
• First Home Super Saver Scheme withdrawal

For the official rules and latest guidance, see the ATO First Home Super Saver Scheme page.

FAQs

What is the First Home Super Saver Scheme?

The First Home Super Saver Scheme lets eligible first home buyers save voluntary super contributions and later apply to release some of those amounts, plus associated earnings, to help buy or build a home in Australia.

How much can you withdraw under the FHSS scheme?

You can count up to $15,000 of eligible voluntary contributions from any one financial year and up to $50,000 across all years. Your releasable amount can include 100 percent of eligible non concessional contributions, 85 percent of eligible concessional contributions, and associated earnings.