First Home Super Saver Scheme

What is the strategy

The First Home Super Saver Scheme allows eligible people to withdraw voluntary contributions made to superannuation, along with associated earnings, for the purpose of purchasing their first home.
Currently, voluntary contributions that can be released are capped at a maximum of $30,000, plus associated earnings. As announced in the 2021 Budget, the maximum amount that may be released will increase from $30,000 to $50,000, plus associated earnings. The maximum annual contribution that can be released remains at $15,000.

This change is to apply from 1 July 2022.

How does the FHSS scheme work?

The first step the member needs to take is to confirm that they are eligible to participate in the FHSS Scheme. Broadly, the member must:

  • have never held any freehold interest in land in Australia (including any long-term leasehold interest of 50 plus years). This is either in their individual capacity or through a controlled foreign company title interest;
  • be 18 years or older; and
  • have not previously received any payment under the FHSS

A member may still be eligible for the FHSS Scheme if they have previously owned property in Australia if they have suffered financial hardship subject to them satisfying further conditions. This measure was provided to assist individuals who have suffered financial setbacks, like relationship breakdowns, to exit the rental market and start over again. Supplemental regulations will specify the relevant circumstances the ATO will consider to make such a determination.

A member should check whether their fund accepts FHSS contributions. The FHSS Scheme precludes defined benefit funds and constitutionally protected funds from participating which may result in many public sector employees having to find alternative funds for their FHSS contributions.


Once a member has determined that they are eligible to participate in the FHSS Scheme and their fund can accept FHSS contributions, the member can begin making eligible contributions to their super fund. Broadly, an eligible contribution is:

  • a concessional or non-concessional contribution that is not a mandated employer Thus, contributions that are made to cover an employer’s minimum superannuation guarantee requirement are excluded from the FHSS Scheme;
  • eligible insofar as it does not result in the member exceeding their concessional and non-concessional contributions caps; and
  • eligible insofar as it does not exceed the $15,000 FHSS contribution limit in any financial year (‘FY’), commencing from 1 July

The maximum amount of contributions that may be eligible to be released under the FHSS Scheme is $30,000.

When an eligible contribution is made, the relevant super fund is required to allocate the contribution accordingly and inform the ATO. The member will, in due course, be able to check their FHSS contribution balance with the ATO from time to time.

Determination of release

Once the member has accumulated a certain amount in their FHSS allocations, they can request an FHSS Scheme determination from the ATO. The ATO will then provide the member with an estimate of the member’s FHSS Scheme maximum release amount, which includes:

  • concessional and non-concessional FHSS contributions;
  • associated earnings as calculated by the ATO — shortfall interest charge rate X [FHSS contributions + sum of earlier daily proxy amounts]; and
  • less PAYG withholding tax

After considering the amount in the FHSS determination, the member can then request a release authority from the ATO. The ATO will then generate a release authority and provide confirmation to both the member and their respective superannuation fund. Once the super fund receives the release authority, it releases the relevant amount to the ATO. The ATO receives the amount from the fund and deducts the PAYG withholding tax. After any tax is deducted, the ATO makes the net payment to the member. The member must include the FHSS amount received in their income tax return for that FY. The member is entitled to a 30% non-refundable tax offset of the FY's FHSS amount.

Thus, if a member is on a 45% tax rate, they will only pay 15% on released amounts plus applicable levies.

Purchase, re-contribution and tax

Within 12 months after the release of the FHSS released amount, the member can either:

  • purchase or construct a residential premise;
  • recontribute the amount; or
  • request another extension for up to 12 months

If the member enters into a contract to purchase or construct residential premises, the member is required to notify the ATO within 28 days after the member enters into such a contract.

If the member decides to recontribute the FHSS released amount (eg, they do not purchase or construct within a 12-month period), they are required to inform the ATO shortly after the release of the FHSS released amount.

The recontributed amount will count towards the member’s non-concessional caps for the FY the amount was recontributed and the member cannot claim a deduction in respect of these amounts.

A member can request that the ATO extend the period for entering into a contract by up to 12 months. Thus, the scheme generally provides a maximum period of up to 24 months from when the relevant amount is released to enter into a contract to purchase or construct a residential premise.

Alternatively, if the member retains an FHSS amount beyond the relevant 12 months, or if an extension is granted, beyond a 24-month period, they pay an FHSS tax of 20% plus applicable levies on the FHSS released amount.

Other things to know

  • The home you purchase or construct must be located in Australia.
  • You can also sign your contract to purchase your property after you make a valid release request.
  • If you have an outstanding debt with the ATO or another Commonwealth agency, your FHSS release amount may be offset against this debt. Payment of your FHSS amount could be delayed or reduced (including to nil) or both if you have an outstanding Commonwealth debt.
  • You have 12 months from the date you make a valid release request to notify us if you have signed a contract to purchase or construct your home, or recontributed the required amount to your super fund (see information below).
  • By withdrawing super you will erode your retirement savings.
  • You may request more than one FHSS determination however you can only apply for a release authority once, even if you have requested an amount less than your FHSS maximum release amount.
  • associated earnings are taxable at your marginal tax rate, less a 30% tax offset.
  • You will need to enter a contract to purchase or commence construction on your first home within 12 months of the funds being released from super. This may be extended in certain circumstances for a further 12 months at the discretion of the Australian Taxation Office.
  • If you do not enter a contract to purchase your first home within 12 months, you have the choice of contributing the released amount back to super, or you will have to pay additional tax.
  • If investing outside of the super system while waiting to purchase your first home, the tax you will pay on your investment earnings, including capital gains may be higher than if the funds were retained inside the super.
  • The lump-sum you withdraw will leave the super system. If you wish to re-contribute this to super in the future, you will need to comply with the requirements for making contributions. This includes meeting age restrictions and complying with contribution caps.
  • If you have made personal super contributions to your existing super fund and you intend to claim a tax deduction for any of those contributions, you must give your existing fund a “notice of intention to claim a tax deduction”, and they must acknowledge receipt of the notice. This must occur before you submit your request to withdraw superannuation savings or you will be unable to claim a tax deduction.
  • If you are under pension age, amounts you have in the accumulation phase of super are excluded from assets and income testing when determining your entitlement to Government income support benefits. By withdrawing your savings from super, they may be subject to assets and income testing purposes.

How an adviser can help

We can help you realise the full tax savings of a salary-sacrificing arrangement with the goal of buying property in mind.  We can help assess

  • That your nominated super fund(s) will release the money.
  • Ask your fund about any fees, charges and insurance implications that may apply.
  • Determine the best savings plan that will meet your cash flow situation.

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This information has been provided as general advice. We have not considered your financial circumstances, needs or objectives. You should consider the appropriateness of the advice. You should obtain and consider the relevant Product Disclosure Statement (PDS) and seek the assistance of an authorised financial adviser before making any decision regarding any products or strategies mentioned in this communication.
Whilst all care has been taken in the preparation of this material, it is based on our understanding of current regulatory requirements and laws at the publication date. As these laws are subject to change you should talk to an authorised adviser for the most up-to-date information. No warranty is given in respect of the information provided and accordingly, neither Alliance Wealth Pty Ltd nor its related entities, employees or representatives accepts responsibility for any loss suffered by any person arising from reliance on this information.

Posted in Fact Sheet.