First Home Super Saver Scheme (FHSSS): A Simple Guide

The First Home Super Saver Scheme (FHSSS) is an Australian government program designed to help first-time homebuyers save for a house deposit using their superannuation. It allows you to make extra contributions to your super fund, which can later be withdrawn to buy your first home.

How Does It Work?

The scheme lets you make voluntary contributions to your super fund, which can be withdrawn later to help pay for a home deposit. These contributions receive tax benefits, helping you save faster.

Key Features

  1. Extra Savings in Super
    • You can add extra money to your super fund.
    • Contributions can be before-tax (concessional) or after-tax (non-concessional).
  2. Contribution Limits
    • Up to $15,000 per year can be added under this scheme.
    • The maximum total amount you can withdraw is $50,000 per person.
  3. Tax Benefits
    • Before-tax contributions are taxed at only 15%, which is lower than most income tax rates.
    • Withdrawals come with a tax discount, helping you keep more of your money.

Who Can Apply?

To be eligible, you must:

  • Be at least 18 years old.
  • Have never owned a property in Australia.
  • Live in the home for at least six months within the first 12 months of purchase.

How to Use the FHSSS

  1. Make Extra Contributions
    Add money to your super through salary sacrifice or after-tax deposits.
  2. Apply for FHSSS Determination
    Request an approval from the Australian Taxation Office (ATO) to confirm how much you can withdraw.
  3. Withdraw Your Savings
    Once approved, request a release of your savings from your super fund.
  4. Buy Your First Home
    Use the money within 12 months to buy or build a home.

Pros and Cons

Pros:

  • Tax Savings: Lower tax rates help you save more.
  • Boost Your Deposit: Super funds may grow your savings faster than a bank account.
  • Couples Can Benefit More: Each person can save up to $50,000, doubling the potential deposit.

Cons:

  • Restricted Use: Money can only be used for a home deposit.
  • Yearly Limits: Savings are capped at $15,000 per year.
  • Market Risks: Super funds can fluctuate with market changes.

Common Mistakes to Avoid

  • Exceeding Contribution Limits: Extra money beyond the cap may not be eligible.
  • Skipping ATO Approval: You must get approval before withdrawing funds.
  • Not Meeting Residency Requirements: You must live in the home to qualify.

Final Thoughts

The FHSSS is a great way for first-time buyers to save for a home with tax benefits. If you’re planning to buy your first home, consider using this scheme to boost your savings. Speak with a financial expert to ensure you’re making the most of it.

The Team at The Accountants and The Finance Brokers are here to help you navigate your cash flow requirements in your business. We offer complimentary cash flow reviews and assist you in understanding your finance needs.