Your 101 Guide to the First Home Super Saver Scheme
Our recent survey revealed a worrying figure amongst Aussies – 56 per cent of us are unaware of the First Home Super Saver Scheme (FHSSS), and of those who are, only one per cent understood the finer details.
The FHSSS was introduced to help first home buyers enter the property market sooner. Unfortunately, without being armed with the knowledge needed to take advantage of the scheme, you could stand to miss out on the potential benefits of the initiative.
Luckily, we’re here to help with our handy 101 guide.
Am I eligible?
As a first step, be sure to assess your eligibility for the scheme.
Go through our check list below to see if you can take advantage of the FHSSS:
- You’ve never owned property in Australia* (including investment properties, vacant land, commercial property, a lease of land or a company title interest in land)
- You live or intend to live in the premises you are buying as soon as is practicable
- You intend to live in the property for at least six months of the first 12 months that you own it
- You are over 18 years of age or older when applying for the release of your First Home Super Saver contributions
*Note: If you have owned property previously, you may be allowed to take part in the scheme if you’re able to demonstrate financial hardship that led to loss of ownership of a property.
Things to think about
- You can contribute a maximum of $15,000 per year, and up to a total of $30,000 over the life of the scheme.
- You can only release and use this amount to purchase a first home and any additional voluntary contributions cannot be released in relation to the programme.
Voluntary contributions, caps and your tax obligations
- For concessional (before-tax) voluntary super contributions, the tax rate sits at 15%. These contributions are capped at $25,000 per year.
- Non-concessional (after-tax) voluntary super contributions will be taxed at your marginal tax rate and are capped at $100,000 per year.
If you fall in the lower income brackets, you should carefully consider whether or not the scheme will be beneficial to you.
Withdrawing your FHSSS voluntary contribution
- You can begin to withdraw your contributions from the 1 July 2018
- Withdrawal requests will take approximately 12 business days to process.
- Withdrawals and any earnings made are taxed at your marginal tax rate minus a 30% tax offset. (This means that if your marginal tax rate is 34.5% you will end up paying a 4.5% tax rate on withdrawal.)
- Withdrawals won’t reduce your social security entitlements.
I’m eligible and I’m aware of the details. What next?
You can start to make pre-tax or after-tax contributions whenever you’re ready. If you need some guidance, speak to a financial adviser at your super fund. Often these services are offered for free to super fund members.
If you’re keen to take advantage of the tax relief offered by concessional voluntary contributions, speak to your payroll team to see how you can set up salary sacrificing and begin banking towards your dream home.
Now that you’re all set to step foot into your dream home, why not head to our First Home Buyers hub for more great tips and tricks on everything you need to know about purchasing for the first time, or check out our guide for pre-approval to help you start looking for your first home! Don't forget that there can also be other schemes that you could be eligible for as well!