First Home Super Saver Scheme
The First Home Super Saver (FHSS) scheme was introduced by the Australian Government in the Federal Budget 2017–18 to reduce pressure on housing affordability.
The FHSS scheme allows you to save money for your first home inside your superannuation fund. This will help first home buyers save faster with the concessional tax treatment within super.
About the FHSS scheme
From 1 July 2017 you can make voluntary concessional (before-tax) and non-concessional (after-tax) contributions into your super fund to save for your first home.
From 1 July 2018 you can then apply to release your voluntary contributions, along with associated earnings, to help you purchase your first home. You must meet the eligibility requirements to apply for the release of these amounts.
This scheme is suitable for first home buyers if:
- you either live or intend to live in the premises you are buying 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.
You can apply to have a maximum of $15,000 of your voluntary contributions from any one financial year included in your eligible contributions to be released under the FHSS scheme, up to a total of $30,000 contributions across all years. You will also receive an amount of earnings that relate to those contributions.
Find out about:
- Who is eligible
- How you can save in super
- Applying to release your savings
- After your savings have been released
Who is eligible
You can start making super contributions from any age, but you can’t request a release of amounts under the First Home Super Saver (FHSS) scheme until you are 18 years old, and you:
- have never owned property in Australia – this includes an investment property, vacant land, commercial property, a lease of land in Australia, or a company title interest in land 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.
Eligibility is assessed on an individual basis. This means that couples, siblings or friends can each access their own eligible FHSS contributions to purchase the same property. If any of you have previously owned a home, it will not stop anyone else who is eligible from applying.
You may still be eligible even if you have previously owned property in Australia, if the Commissioner of Taxation determines that you have suffered a financial hardship that resulted in a loss of ownership of a property. Regulations are expected to be available just prior to 1 July 2018 specifying the circumstances for this provision.
If you want to be considered under the financial hardship provision you can apply from 1 July 2018. You should apply before you start saving, so that we can determine if the hardship provision applies to you.
If the Commissioner makes a determination that you have suffered a financial hardship, you must also meet the following criteria at the time you request a FHSS determination:
- you must not have acquired a subsequent interest in real property in Australia since you lost the property as a result of financial hardship
- you must be over 18 years of age
- you must not have previously requested a release of FHSS amounts.
Your application under the financial hardship provision must be supported by evidence that demonstrates the link between the loss of the property and the hardship event.
Find out about:
You can start saving by entering into a salary sacrifice arrangement with your employer to make voluntary contributions or by making voluntary personal super contributions. You can contribute into any super fund, although contributions made to a defined benefit interest or a constitutionally protected fund will not be eligible to be released under the FHSS scheme. It is also possible to contribute into more than one fund.
Note: Some employers may not offer salary sacrifice arrangements to their employees.
Before you start saving:
- Check that your nominated super fund/s will release the money.
- Ask your fund about any fees, charges and insurance implications that may apply.
- Be aware that if you receive FHSS amounts, it will affect your tax for the year in which you make the request to release. You will receive a payment summary, and you will need to include both the assessable and tax-withheld amounts in your tax return.
If you want to be considered under the financial hardship provision then you should ask us to determine if these provisions apply to you before you start saving.
Contributions you can make
You can make the following existing types of contributions towards the FHSS scheme:
- Voluntary concessional contributions – including salary sacrifice amounts or contributions for which a tax deduction has been claimed. These are taxed at 15%.
- Voluntary non-concessional contributions that you have made – these are made after tax or where a tax deduction has not been claimed.
You can contribute up to your existing superannuation contribution caps. Having amounts released under the FHSS scheme does not affect the calculation of your concessional or non-concessional contributions for contributions cap purposes. Your contributions still count towards your contribution caps for the year they were originally made.
Making your contributions
When you make voluntary contributions into super, the order and type of the contributions can make a difference to the amount released under the FHSS scheme.
You can withdraw, taking into account the yearly and total limits:
- 100% of your non-concessional (after-tax) amounts
- 85% of concessional (pre-tax) amounts.
There are rules about which contributions will be included in your release amount, based on when the contribution was made and whether it is concessional or non-concessional.
These ‘ordering rules’ are designed to maximise the amount available to you for release, without requiring you to make specific elections about which contributions should be eligible. They also have a flow-on effect on the calculation of associated earnings and the taxation of released amounts.
How your contributions are ordered
We will apply ordering rules when you apply for a FHSS determination to calculate your FHSS maximum release amount. You don’t have to do the calculations yourself.
Your contributions are counted towards your release amounts as follows:
- A first-in first-out rule applies – this means that contributions you make in an earlier financial year are counted before contributions in a later financial year. Contributions you make within a financial year are counted in the order you make them.
- A simultaneous contributions rule applies – this means that if you make an eligible concessional contribution and an eligible non-concessional contribution at the same time (for example, in the same payroll process), your non-concessional contributions are taken to be made first.
- Where you make your contributions within a financial year and you claim a deduction for some or all of the contributions, the resulting eligible non-concessional contributions (if any) are taken to be made before any eligible concessional contribution.
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.
When you are ready to receive your FHSS amounts, you need to apply to the Commissioner of Taxation for a FHSS determination and a release. You will be able to apply from 1 July 2018. You can apply online using your myGov account linked to the ATO.
Note: We 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.
On this page:
- Maximum release amount
- Requesting a determination
- Requesting the release of your savings
- Receiving your amount
- Completing your tax return
The FHSS maximum release amount is the sum of your eligible contributions, taking into account the yearly and total limits, and associated earnings. This amount includes:
- 100% of eligible non-concessional contributions
- 85% of eligible concessional contributions
- associated earnings calculated on these contributions using a deemed rate of return – this is based on the 90-day Bank Bill rate plus three percentage points (shortfall interest charge rate).
The FHSS maximum release amount takes into account the $15,000 limit from any one year and $30,000 total limit to the total contributions across all years when calculating the eligible contributions, before adding the associated earnings.
To withdraw your voluntary super contributions under the FHSS scheme, you need to request a FHSS determination from the Commissioner of Taxation. You can do this from 1 July 2018.
When you apply for a FHSS determination we will tell you your maximum FHSS release amount.
You can request a determination on more than one occasion.
You can then decide to apply for a release of your amounts if you are ready to purchase your home. But be aware that you:
- can apply for a release only once
- must confirm as part of your release application that you will not claim further tax deductions on the non-concessional contributions included in the determination.
Before you request a release of your savings, you should:
- check that you have made all of the voluntary FHSS contributions you want to make
- make sure that you agree with the amounts shown in the FHSS determination. If not, you need to resolve any issues through our standard review processes for determinations before you apply for a release.
You can request a release of the FHSS maximum release amount stated in the FHSS determination, or choose a lower amount.
It will take us approximately 12 business days to process your request.
Note: 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.
The ATO will issue a release authority to your super fund/s and your fund/s will then send the requested release amounts to us.
We will then:
- withhold the appropriate amount of tax
- send the balance of the released amount to you.
A payment summary will subsequently be sent to you. This will show your assessable FHSS released amount, which comprises:
- concessional contributions
- associated earnings on both concessional and non-concessional contributions.
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.
When we receive your released amounts, we will withhold tax that will be calculated at either:
- your expected marginal tax rate, including Medicare levy, less a 30% offset
- 17% if the Commissioner is unable to estimate your expected marginal rate.
The amount of tax withheld is calculated on your assessable FHSS released amounts and will help you meet your end of year tax liabilities. When you lodge your tax return we will know your actual marginal tax rate for the year that you requested the release and will recalculate your tax liability on the released amount. We will take into account the tax that has already been withheld in respect of your assessable FHSS released amount, together with the 30% tax offset.
Your payment summary shows the amount of tax withheld.
You must include the assessable FHSS released amount shown on your payment summary as assessable income in your tax return for the year you request the release. You will also need to include the tax withheld amount so you pay the correct amount of tax.
For example, if you request a release of FHSS amounts on 30 June 2019, include the amount in your 2018–19 tax return. This is even though you won’t receive the released amount until July 2019.
Family tax benefit and child support
Your assessable FHSS released amount is not included in your assessable income for calculating family assistance and child support payments. These amounts were included in prior years, so this will prevent double counting.
Study and training support loans
If you make salary sacrifice contributions into super, they will be a reportable employer super contribution in that income year. These contributions increase your repayment income for study and training support loans and the repayment of these loans.
You will need to review your pay as you go (PAYG) withholding arrangements with your employer. This will help make sure the tax they withhold from your salary, wages and other income during the year is enough to cover the amount you are liable to pay.
When you withdraw contributions under the FHSS scheme they will not be part of your repayment income in the year you request the withdrawal of your super contributions under the FHSS scheme.
Study and training support loans can include:
- Higher Education Loan Program (HELP)
- Student Start-up Loan (SSL) and ABSTUDY SSL schemes
- Trade Support Loans (TSL) program
- Student Financial Supplement Scheme (SFSS).
FHSS scheme and other state government concessions
The FHSS scheme is separate to other concessions offered by state governments.
If you want to access state government concessions as a first home buyer then you will need to check with the relevant state government authority to confirm that you meet the eligibility criteria for each concession.
Once your savings have been released, 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.
The contract you enter into has to be a residential premises. It cannot be any of the following types of property:
- any premises not capable of being occupied as a residence
- a houseboat
- a motor home
- vacant land.
However, where you have or intend to purchase a vacant block of land to build a home on, it is the contract to construct your home that must be entered into within the 12 months (or an extended period) after the release of amounts to you.
Noting that in this situation, you could not have purchased the vacant land before the commencement of the FHSS scheme or before requesting a FHSS determination as you would not be eligible to request a determination as you would already hold real property in Australia.
You must genuinely intend to occupy the property as a home, and demonstrate this by:
- occupying or intending to occupy the property as soon as practicable after purchase
- occupying or intending to occupy the property for at least six of the first 12 months from when it is practicable to occupy it.
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. This amount must be a non-concessional contribution and be at least equal to your assessable FHSS released amount, less any tax withheld. This amount is stated in your payment summary, and may be less than the total amounts released to you
- keep the released amount and be subject to a FHSS tax. This is a flat tax equal to 20% of your assessable FHSS released amounts and not the total amount released.
You must notify us if you either sign a contract to purchase or construct a home, or recontribute the amount into your super fund or you will be subject to the FHSS tax. You can make this notification from 1 July 2018.
For any further information online go to https://www.ato.gov.au/Individuals/Super/Super-housing-measures/First-Home-Super-Saver-Scheme/
However you are most welcome to contact Brad Lipp ‘The Land Man’ as we appreciate that fully understanding can be a bit overwhelming.
Call 0450 201 511 or email email@example.com