Providing first home saver accounts

Roles and responsibilities

Our role

We administer most of the regulatory first home saver account (FHSA) activities, including:

the eligibility rules for opening, issuing and holding an account
rules about contributions to an account
administering and paying the government contribution
taxation of earnings
payment rules
the FHSA misuse tax
tax file numbers (TFNs).

Other administrators

The Australian Prudential Regulation Authority (APRA) is responsible for establishing and enforcing prudential standards and practices for providers, including the:

list of authorised deposit-taking institutions (ADI) and life insurance companies that have notified APRA of their intention to provide FHSAs
list of registrable superannuation entity (RSE) licensees (trustees) authorised to offer FHSAs
reporting of data in accordance with the Financial Sector (Collection of Data) Act 2001.

The Australian Securities & Investments Commission (ASIC) is responsible for disclosure issues and ensuring that consumer protection arrangements apply for the benefit of existing and potential FHSA holders. ASIC provides information about FHSAs to help individuals decide whether to open an account and with which provider.

You must provide a product disclosure statement if you are offering FHSAs. This must outline the key features, benefits and risks of the account, including any fees and charges that apply.

For more information, visit the ASIC website at www.asic.gov.au/asic/asic.nsf

Your role as an account provider

As an account provider, you must:

collect the required FHSA information
undertake certain activities, including the transfer of account holder information
report using the approved forms.

The following information will help you with the administrative requirements for opening, operating and closing FHSAs. It describes how to:

open an account
accept contributions to an account
transfer an account
contribute from an account to super
close an account.

Following these processes will ensure you collect enough information to properly manage your FHSAs and complete a FHSAs activity report. You should read this information in conjunction with Electronic reporting specification - first home saver accounts (FHSA) - final specification release found on the software developers page.

What you must do as an account provider

As a FHSA provider, you must register with the Australian Prudential Regulation Authority (APRA). You will then be listed on the APRA website.

APRA will not provide us with information about new account providers. We learn about a new provider when they submit their initial FHSAs activity report.

You must meet our approved form requirements. However, you can add any other information to your forms to meet your business needs and any additional legal requirements; for example, the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.

You must use the information you record to meet your reporting obligations with us under Division 391 in Schedule 1 to the Taxation Administration Act 1953. This division contains information about:

FHSA activity reports
transfers between FHSA providers.

Your FHSA reporting obligations will be cancelled and we will no longer expect you to lodge a FHSA activity report after you inform us of all of the following:

you will no longer offer FHSAs
you have transferred or closed all your accounts
you have submitted your last FHSA activity report.

Forms and reporting

Approved forms

Under the First Home Saver Accounts Act 2008, we can specify what information account holders and providers must provide in order to administer FHSAs. We have published text, which we refer to as approved forms, which must be included on the forms you design for FHSAs.

There are approved forms for:

Approved forms also include the following downloadable forms:

First home saver account information request (NAT 72836)
Super contributions from a first home saver account (NAT 72537).

Reporting obligations

If you had any FHSA activity during the year, you must lodge a FHSA activity report with us between 1 July and 31 October the relevant financial year.

Lodging an FHSA activity report via ECI - our electronic commerce interface

ECI is a downloadable application.
You must be connected to the internet.
If asked to download the FHSA function for the Australian Taxation Office (ATO), select 'Yes'.

How to lodge an FHSA activity report file using ECI

Select Investment Bodies from the menu on the left of the screen.
Select FHSA activity report.
Either enter the name of the file to be sent or locate the file by selecting Find.
To validate the file before you send it, select Check File.
Validation results will display either

x file did not validate correctly
0 files validated

0 files validated correctly
x files validated

If a file did not validate correctly, select View Error File, which takes you to the Validation report. You must correct all errors before resending the files.
When the file validates with no errors, select Send.
A dialogue box is displayed to confirm you want to send the file. Select Yes.
You will be asked to enter the digital certificate password.
A transmission report will display showing the file name and location, and an ATO reference number. You can save or print these details for future reference.

How to retrieve an FHSA remittance advice recovery notice (RARN) file from ECI

Select Check/Status Receive menu item
Select Update Status
Choose retrieved tab
Select Get file
Download screen displayed. Select Download
Dialogue box displayed
Choose location and file name and select OK
File is downloaded. Select OK and then Close
Check/Status receive screen displayed - downloaded file marked as downloaded
The file is available for 90 days after you receive an email notification. The file is retained for seven days after it is downloaded.

For more information about FHSA activity reports, visit softwaredevelopers.ato.gov.au

You can write to us to tell us you are ceasing to offer FHSAs. You must lodge activity reports until we receive your notification and/or you cease offering accounts.

Your tax obligations

Earnings on FHSAs are taxed at 15%, which you must pay as the account provider. Account holders do not have to declare their FHSA earnings in their tax returns. When the account holder closes their account, the money they withdraw will be tax-free.

Tax file numbers

Tax file number (TFN) quotation

An individual applying for a FHSA does not have to quote their TFN; however, you cannot open an account for them if they don't.

You cannot issue an account without a valid TFN and you must use the TFN algorithm to confirm the TFN is valid before you open the account. If you find the TFN is incorrect, perhaps because of an administrative error, you must ask the account holder to requote their TFN within 28 days.

For more information about the TFN algorithm, visit softwaredevelopers.ato.gov.au

If an account holder transfers their account balance to another provider or to a super fund, you must provide their TFN to the other provider or super fund.

After you lodge the FHSA activity report, the account holder's TFN will be matched against our records. If we identify that the TFN is incorrect and we match the correct TFN, we will quote the correct TFN directly to you. If we cannot match the TFN, we will contact you or the account holder for more information.

You must store the TFN until you no longer need it for reporting purposes. This is generally when you have met your obligations under the FHSA activity report and have received the outcome of lodgment from us, and either:

the account is closed, or
the holder transfers their balance to a new provider or super fund and you are satisfied the transfer has been completed successfully.

Once you have met these obligations, you must destroy the TFN.

TFNs are subject to the Privacy Act 1988. Visit www.privacy.gov.au to find the TFN privacy guidelines.

Quarterly TFN reporting

Do not report FHSAs via the quarterly TFN reporting.

Annual investment income report

Do not report the FHSA earnings on the Annual investment income report.

First home saver account law

The following provides the framework regulating the First Home Saver Accounts initiative:

First Home Saver Accounts Act 2008
First Home Saver Accounts (Consequential Amendments) Act 2008
Income Tax (First Home Saver Accounts Misuse Tax) Act 2008
First Home Saver Accounts Further Provisions Act 2008 (FHSA Amendment Act)
Tax Laws Amendment (2011 Measures No. 1) Bill 2011

The approved forms provisions, as detailed in section 388-50 in Schedule 1 to the Taxation Administration Act 1953 for taxation laws, also apply to how FHSA are administered.

In most situations where account providers must use a form under the FHSA provisions, the way you design the form is at your own discretion unless otherwise indicated. See Forms and reporting.

For more information, refer to section 388-50 in Schedule 1 to the Taxation Administration Act 1953.

Operating a first home saver account

Personal contributions

Personal contributions are the total amounts deposited into an account by or on behalf of the account holder. They do not include:

government contributions
amounts transferred from another FHSA
contributions made under a family law obligation
amounts redeposited on the re-opening of an account
earnings
amounts withdrawn when the account is closed during the cooling off period.

You must report the total personal contributions made to an account each financial year so we can calculate the correct government contribution. If an account holder transfers the balance of their account to an account with you before the end of the financial year, you must report the personal contributions, not the original provider.

Who can make personal contributions?

Anyone can make personal contributions to an account holder's account, for example, parents or employers.

Personal contributions must be made from after-tax salary.

Account balance cap

FHSAs are subject to a balance cap that is indexed annually. Indexation moves the cap in $5,000 increments, rounded down to the nearest multiple of $5,000. The cap may not increase every year but it will not decrease. For more information about the rates and thresholds, refer to First home saver accounts - rates and thresholds.

Once the account balance exceeds the cap, no further personal contributions can be made. However, any earnings and outstanding government contributions can still be contributed to the account.

If a personal contribution will cause the account balance to exceed the cap, you must return either the entire payment or the amount of the payment exceeding the cap to the holder within 30 days. If the personal contribution is from a third party, the amount must be returned to the account holder, not the third party.

If a transfer is made from one FHSA to another under a family law obligation and the transferred amount causes the account to exceed the cap, you must return the entire amount to the original provider.

An account holder can transfer the entire balance of their FHSA to a new provider, even if the balance of the old account is more than the cap. However, no further personal contributions can be made to the new account as it has reached the cap. Once the transfer is complete, the old account must be closed.

The account balance cap is a lifetime limit. Once the account balance cap is exceeded, the account holder cannot contribute any further personal contributions, even though indexation may increase the cap in later years.

If an account holder exceeds the account balance cap, they cannot make further personal contributions even if account fees reduce the balance to less than the account balance cap.

Exceptions

An account holder has not exceeded the account balance cap if:

the account balance exceeds the cap due to earnings or an outstanding government contribution, or
the balance drops below the cap because funds have been transferred out of the account under a family law obligation. This means the account holder can keep making personal contributions up to the amount of the cap for the relevant financial year.

FHSA government contributions

The government will make contributions (up to a certain limit each year) when personal contributions are made.

The maximum FHSA government contribution amount is indexed annually. Indexation moves the threshold in $500 increments, rounded down to the nearest multiple of $500.

For more information about the rates and thresholds, refer to First home saver accounts - rates and thresholds.

For example, the government will make a contribution equal to 17% of the personal contributions for the financial year, up to a maximum of $935 for the 2010-11 income year. This means if the holder contributes $5,500 or more to their account during that year, the government will contribute $935 to that account.

Unclaimed money

Where you have accounts that have been inactive for seven years and you have been unable to contact the account holder, you must lodge these funds with ASIC to be held as unclaimed money. Account holders can access their unclaimed money by contacting ASIC directly once the money has been lodged on the register.

For more information about lodging unclaimed money with ASIC, visit www.asic.gov.au/asic/asic.nsf and search for 'unclaimed money'.

Opening a first home saver account

Your obligations

To open a FHSA, you must ensure the applicant:

is aged 18 or over and under 65 years old
has a TFN they can quote in their application
signs a declaration that they have not previously opened a FHSA
signs a declaration that they have not previously owned a home in Australia or Norfolk Island that has been their main residence.

As a FHSA provider, you must ensure each individual who wishes to open an account:

completes an application on the approved form
states they satisfy all of the eligibility requirements
provides all the required information, including their TFN.

These requirements are in addition to those stipulated under other laws, such as the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.

The account application and relevant declarations can be made electronically or in writing. You must retain them on paper or a data processing device. We may ask for copies at a later date.

An account holder can only have one account operating at a time unless they are transferring to another provider and signed a transfer authority declaration. To minimise the risk of a holder operating two or more accounts, we recommend you check the completed declaration and ensure they complete a transfer authority declaration. If a holder operates more than one account, we will issue a notice to close the invalid second and subsequent accounts.

If the account holder is transferring their account balance to an account with you, they must:

sign a transfer authority declaration
give this declaration to you as the new provider.

You must:

complete your details
send the declaration to the original provider.

The transfer is complete when the original provider sights the declaration and sends the account details and balance to you. The new account will become inactive if the transfer is not completed within 44 days.

When reporting the opening information in your FHSA activity report, you must indicate the reason for opening the account. You do this by selecting one of the following reason codes:

Account opening reasons	Reason Code	Explanation
New account	N	A new FHSA is opened.
Transfer from another provider	T	The holder transfers their account and balance from another provider.
Family law obligation - transfer	F	The holder opens a new FHSA with a transfer under a family law obligation - that is, under a court order or binding financial agreement.
Redeposit an account amount	R	The FHSA holder redeposits after there is a failure to purchase a property.

Approved form - opening an account

Information you must collect

As a FHSA provider, you must collect and record the following information about the account holder to fulfil your reporting and record keeping obligations:

TFN
full name
sex
date of birth
phone number
full address.

You must also record:

the date the account was opened with you
the reason code for opening the account.

Sample form

We have developed a sample account opening form (PDF, 87KB) you can use or adapt to suit your organisation. The sample form contains information you must include in your form in the way we have written it. This information is highlighted with a blue background.

Section B of the sample form relates to changing account providers and can be used as a transfer authority.

Only paper forms require signatures.

Transferring funds to another first home saver account

Your obligations

A FHSA holder can only hold one account at a time, unless they temporarily hold two accounts while transferring to a new provider.

Account holders can request that the entire balance of their account be transferred to another provider at any time. This request must be carried out within 30 days. To help prevent account holders from having two accounts open at once, the new provider can arrange the transfer on the holder's behalf. The transfer must be to an account held with another provider.

If you receive a transfer application from another provider, you must:

notify the holder in writing within 30 days of receiving the application that the account is closed. You can do this by sending a copy of the completed transfer application form
transfer the balance to the new provider within 14 days of your closure notification to the holder
notify the new provider within seven days of transferring the balance that the account is closed.

An amount transferred from one FHSA to another is not a personal contribution and is not subject to the account balance cap.

Process for completing a transfer

To complete a transfer, you must follow these steps:

Step 1

The holder must:

receive the new provider's product disclosure statement
complete an application or transfer form
sign the transfer authority declaration
give the transfer form to new provider.

Step 2

The new provider must:

complete the relevant information on the application or transfer form
open a new first home saver account
send the form to the original provider.

Step 3

The original provider must:

record the new provider's information
complete the relevant information on the application or transfer form
send the form and account balance to the new provider.

Step 4

The original provider must close the account.

Step 5

After receiving the form and account balance, the new provider records all the relevant information from the original provider.

Step 6

The original provider reports the account holder's activity on the FHSA activity report.

Step 7

The new provider reports the account holder's activity on the FHSA activity report.

Approved form - transferring funds

Information you must collect

You must collect and record the following information to meet your reporting obligations.

The account holder must provide the new account provider (you) with their:

previous account provider's name
previous FHSA number
TFN
full name
sex
date of birth
phone number
full address.

Ensure the account holder completes and signs a transfer authority declaration.

As the new account provider, you must provide the original account provider with:

your Australian business number (ABN)
your name
the new FHSA number
your full address
a contact name
your contact phone number
your fax number.

You must also collect the following information from the old account provider:

their ABN
a contact name
their contact phone number
their fax number
the FHSA holder's reference number
the date the original FHSA was opened
the closing/payment reason code
the account balance amount that was transferred
the date the account balance amount was transferred
the amount of personal contributions the account holder made in the current financial year
the number of years personal contributions of $1,000 or more have been made
the account holder's personal account balance cap
the address of the home that has been built or purchased before meeting a condition for release
date the account holder built or purchased a home before meeting a condition for release.

Sample form

Section B of the sample form relates to changing account providers and can be used as a transfer authority.

Only paper forms require signatures.

Redepositing funds to another first home saver account after a purchase fails to proceed

If an account holder purchases a home and the purchase fails to proceed, the account holder must redeposit the funds back into a FHSA within six months of closing the account.

If they decide to deposit the funds into a FHSA with a different provider, the transaction must be treated as a transfer and all relevant information from the old provider and previous FHSA must be passed on to the new provider.

Example

Candice is a FHSA holder. She closes her account and withdraws the funds to purchase a home but the purchase fails to proceed. Under these circumstances, Candice must redeposit the funds to a FHSA, which she chooses to do with a new provider. The new provider will need to arrange with the previous provider to transfer all of her account information.

Contributing to super

Your obligations

An account holder can contribute the balance of their account to super and close their account at any time. To transfer an amount to super, account holders must use the Super contributions from a first home saver account (NAT 72537) form.

A super fund may not accept a contribution and return the balance to you if:

they do not recognise the account holder as a member of their super fund from the account details on the Super contributions from a first home saver account (NAT 72537) form
the account holder is no longer a member of their super fund
the account holder has nominated a super fund that cannot accept contributions from a FHSA.

In these circumstances, contact the account holder and ask them to resubmit the form with:

account and personal details matching those held by the super fund - advise the account holder to contact their super fund to confirm their details, or
nomination of another super fund that the account holder confirmed will accept contributions from a FHSA.

If the account holder cannot correct the error or has not nominated another super fund in writing, you must submit a new form to contribute the balance of their account to your default super fund.

If a super fund returns an account holder's contributions to you after you have lodged your FHSAs activity report, you must lodge an amended report advising where the funds were eventually contributed.

An account holder may have to contribute some or all of their FHSA balance to their former spouse's super fund - see Family law obligations.

The super fund contribution process

Voluntary contribution to the account holder's super fund

An account holder can transfer their account balance to super at any time and close their account by completing the form Super contributions from a first home saver account (NAT 72537).

When you receive this form from the holder you must:

ensure the account holder's TFN is quoted on the form
complete part 2 of the form and send to their nominated super fund along with the account balance
send a copy of the completed form to the account holder
report the contribution on your FHSA activity report with one of these reason codes

S - compulsory contribution to super, or
V - voluntary contribution to super.

As the account provider, you must notify the:

account holder in writing within 30 days that their FHSA has been closed by sending them a copy of the completed Super contributions from a first home saver account (NAT 72537) form
super fund within seven days that the FHSA has been closed.

Compulsory contribution to the account holder's super fund

You must close an account within 14 days and transfer any balance to super if:

the transfer from another provider is not effected within 30 days
the account holder advises you they are no longer eligible to hold an account
we advise you that the account holder is not eligible to hold an account and the holder provides no evidence to the contrary within 30 days
we advise you that the account holder's quoted TFN is invalid and we are not satisfied they hold a TFN.

Compulsory contribution to the account provider's default super fund

If we decide an account should be inactive or the account holder is no longer eligible to hold an account, we may issue you with a closure notice.

If you receive a notice you must:

make the account inactive from the date you receive the notice
advise the holder they have 30 days from the date of notice to provide their super fund details to you using the Super contributions from a first home saver account (NAT 72537) form
transfer the balance to the holder's nominated super fund or your default super fund (if no nomination is made) after 30 days. This transfer must be made within 14 days. If transferring to your default super fund, use the Super contributions from a first home saver account (NAT 72537) form and provide the default super funds details in part 1 of this form.

Super fund cheque payment details

When you (as payer) make a contribution to a super fund by cheque, make the cheque payable to 'For the account of (FHSA holder name)'.

Approved form - contributing to super

You can download a copy of Super contributions from a first home saver account (NAT 72537) and its instructions from our website.

Approved form - building or purchasing a home before meeting a condition of release

If account holder builds or purchases a home before meeting a condition for release, they must choose whether to:

have the balance of the account paid to them for their mortgage at the end of the minimum qualifying period, or
have the account closed and the balance paid to their super (see contributing to superannuation).

The holder must notify you of their decision within 30 days of building or purchasing the home.

You must not permit any further personal contributions from that date.

If the account holder chooses to have the balance paid to them at the end of the minimum qualifying period, any outstanding government contributions and future account earnings can still be deposited into the account.

Once the minimum qualifying period is met, the account holder must apply to you to have the account closed and the balance paid to them for their mortgage.

You must report these accounts as active in your FHSA activity report to make sure that any outstanding government contributions are paid correctly.

Minimum qualifying period

The account holder must contribute at least $1,000 per year into their account in at least four financial years (not necessarily in consecutive years) before they can withdraw the money to build or buy a home. This is known as the 'four year rule'.

The exception is where they have built or purchased a home before meeting the 'four year' rule and have asked you to pay them the balance of the account at the end of a minimum qualifying period. Accounts must still be open for a minimum qualifying period of four years. Any previous years where they contributed at least $1,000 will be used towards the four year requirement.

Example one

Pamela had a FHSA for four years and made personal contributions of $6,000 each year. Pamela purchased her first home and can close the account and withdraw the balance as she has made $1,000 of contributions in at least four financial years.

Example two

On 10 August 2009, Nina opened a FHSA. In that income year (2009-10) she contributed $2,000 to the account. Between 1 July 2010 and 30 June 2011 (2010-11 income year) she only contributed $500. On 30 October 2011 (2011-12 income year), Nina purchased her first home and within 30 days let her account provider know that she would like the account balance paid to her at the end of the qualifying period. Nina cannot contribute any further money to her FHSA now that she has purchased her first home.

Although Nina's account has been open for three years, she only made the minimum contribution of at least $1,000 in one income year:

2009 - 2010$2000
2010 - 2011 $500
2011 - 2012 $0 (purchased home)

The account must be open for a further three income years (one year will be the year in which the home was purchased) before payment can be made to Nina for her mortgage.

The income years which will contribute towards the release conditions are:

2009 - 2010 $2000 yes
2010 - 2011 $500 no
2011 - 2012 $0 yes (purchased home)
2012 - 2013 $0 yes
2013 - 2014 $0 yes

Overall, Nina will be able to withdraw her money to put towards her mortgage from 1 July 2013 (2013-14 income year).

Information you must collect

You must collect and record the following information (where relevant) to meet your obligations in administering the account:

the full address of the home purchased
the date the property was purchased.

The account holder must complete the account identification details.

Sample form

We have developed a sample account inactive form (PDF, 69KB) you can use or adapt to suit your organisation. The sample form contains information you must include in your form in the way we have written it. This information is highlighted in the sample form with a blue background.

Only paper forms require signatures.

Closing a first home saver account

Your obligations

You must not make a payment from a FHSA unless you are authorised by law.

You are authorised to make a payment from an account only where one or more of the following applies:

the payment is a FHSA home acquisition payment
the payment is a FHSA mortgage payment
the FHSA holder is aged 60 or over
the payment is a compulsory contribution of balance of an inactive FHSA to superannuation
the payment is a voluntary contribution to superannuation
the payment is a voluntary transfer of the balance of the FHSA to another FHSA
the payment is being made under a family law obligation

by contribution to the superannuation interest of the FHSA holder's spouse or former spouse in a complying superannuation plan, or
by transfer to an FHSA held by the FHSA holder's spouse or former spouse, or
to the FHSA holder's spouse or former spouse, if the spouse or former spouse is aged 60 or more

the payment is in relation to

subsection 25(2) (account holder aged 65 or more), 26(2) (inactive FHSA) or 27(2) (holder in breach of account balance cap), of the First Home Saver Accounts Act 2008, or
subsection 992A(4) (unsolicited offer of financial product), 1016F (defective product disclosure statement) or section 1019B (cooling-off period) of the Corporations Act 2001

the FHSA holder is deceased
the payment is an amount of fees owing to the FHSA provider for providing the FHSA
the payment is an amount owed to the Commonwealth for overpayments of government FHSA contributions.

If you make a payment from a FHSA that is not authorised by law, you may be penalised.

When closing a FHSA you should pay the entire balance where the account holder:

builds or buys a home
transfers to another provider
contributes their account balance to their super
withdraws their entire balance within the cooling off period
reaches 60 years of age and requests that their account be closed
reaches 65 years of age
dies.

A partial payment can be made without closing the account in these instances:

under a family law obligation
to pay provider fees from the account
to pay a trustee in bankruptcy
to repay overpaid government contributions
if the account holder is over 60 years of age and requests partial payment - the account then becomes inactive and any remaining balance must be contributed to their super.

If an account holder does not withdraw the entire balance, the account becomes inactive. You must contribute the remaining balance to their super fund within 14 days. The account holder will need to complete the Super contributions from a first home saver account (NAT 72537) form to nominate their super fund. If they do not nominate a super fund within 14 days, you must complete the Super contributions from a first home saver account (NAT 72537) form to contribute the balance to your default super fund and close the account.

See Contributing to super for information about closing an account and transferring the balance to the account holder's super fund.

Purchasing or constructing a home

When a payment is made from a FHSA for the purchase or construction of a home, the account holder must provide you with:

a signed declaration
details of the property purchased (including address)
date the property was purchased
details of the qualified individuals if property was co-purchased prior to meeting the four year rule.

Building or buying a home after meeting the 'four year rule' requirement

Where an account holder has deposited at least $1,000 per year into their FHSA in at least four financial years (not necessarily in consecutive years) they can withdraw the funds to purchase a home. This is known as the 'four year rule'.

Contributions can be as little or as much as the account holder can contribute every year, up to the account balance cap.

The four year rule still applies if the account holder has exceeded the account balance cap. In this instance, the account holder does not need to deposit money into the account each year but they must hold the account for at least four financial years.

The account holder must use an approved form to declare that they have met a condition for release before you allow the money to be withdrawn and the account to be closed.

If an account holder purchases a home with a co-purchaser who meets the four year rule and the sale fails to proceed, the account holder must re-contribute the funds to a FHSA.

If the account holder was only eligible to withdraw their funds because the co-purchaser satisfied the four year rule, you must record the number of years they held the account and made deposits upon re-opening. The re-contribution will be treated as a transfer if the account holder reopens the account with a new provider.

The funds must be used in the course of buying or building a first home.

This can include:

paying a deposit for the purchase of an existing home
paying a deposit or instalments for a home and land package
paying for the purchase of vacant land on which a home will be built
paying a deposit or instalments for the construction of a home on land owned by the account holder
meeting incidental costs you incur in acquiring the home - such as legal expenses, council fees and stamp duty
paying the balance of the account to an approved mortgage.

Building or buying a home before meeting the 'four year rule' requirement

An account holder may withdraw the balance of their account before qualifying for the four year rule if they:

purchase a home in partnership with one or more individuals who have qualified for the four year rule
are 60 years of age or over.

If an account holder builds or buys a home before meeting the four year rule they can choose to have the balance of the account paid directly to them for their mortgage at the end of their minimum qualifying period. They must notify you within 30 days of buying or building their home and must pay the funds to their mortgage.

You must not permit any further personal contributions from that date. Any outstanding government contributions and future account earnings can still be deposited into the account.

Once the minimum qualifying period is met, the account holder must apply to you to have the account closed and the balance paid to them for their mortgage.

You must report these accounts as active in your FHSA activity report to make sure that any outstanding government contributions are paid correctly.

The funds must be paid towards the account holder's mortgage within 28 days of release from the account. If the balance of the mortgage is less than the balance of the funds the excess must be paid to the account holder's superannuation.

If the home is sold before the end of the minimum qualifying period, the account must be closed and the balance paid to the account holder's superannuation.

If the account holder dies

You can make a payment directly to the account holder's estate if they die. To do this, you must:

confirm their date of death
ensure you are paying the account balance to their legal representative
record their date of death and the payment details for reporting purposes.

The legal representative may ask you for a letter (on letterhead) detailing the:

personal contributions made in the income year of the account holder's death
closing balance
FHSA number
provider's ABN.

If the account holder becomes bankrupt

The FHSA payment rules do not override the Bankruptcy Act 1966. You can pay part or all of the account balance to the trustee in bankruptcy. Before making the payment, you must:

sight evidence that the trustee has been appointed by a court
receive a written payment request from the trustee.

If the account holder is 65 years or more

An account holder is not eligible to hold a FHSA once they turn 65 years. You must close their account within 14 days of their 65th birthday and:

pay the balance of the account directly to the account holder, or
contribute the account balance to a super fund nominated by the account holder.

If the account holder does not nominate a super fund, you can make the payment to your default super fund. In these cases, either you or the account holder must use the Super contributions from a first home saver account (NAT 72537) form.

Account closure reason codes

You can use the account closure form to pay out the balance of a FHSA and close the account if any of these circumstances apply to the account holder:

they meet the four year rule and purchase their first home
they do not meet the four year rule but are purchasing their first home jointly with an account holder who meet the four year rule
they are purchasing their first home and are at the end of the minimum qualifying period
they are 60 years or older and want to withdraw their money
they apply to close their account within the cooling off period
they die
other reasons as authorised by law.

You can pay out all or part of an account holder's balance as a result of bankruptcy or a family law obligation. After making the payment, the account can remain open regardless of the balance. To authorise the payment, you must see:

bankruptcy documentation, such as evidence that a trustee has been appointed by the court, or
binding financial agreements or court orders.

The account holder does not have to complete a closing application or withdrawal form.

To close an account and contribute the balance to super, refer to the form described in Contributing to super.

When reporting the closing information in your FHSA activity report, you must indicate the reason for closing the account. You do this by selecting one of the following reason codes:

Reasons for payment	Reason code	Explanation
Family law obligation - contribution to super	G	The account holder must pay part or all of the account balance to their spouse or former spouse under a family law obligation and you are paying to the spouse's or former spouse's super fund - use the Super contributions from a first home saver account under a family law obligation form.
Family law obligation - transfers/over age 60 payments	F	The account holder must pay part or all of the account balance to their spouse or former spouse under a family law obligation and you are paying: them directly because they are 60 years or over - use the first home saver account closing/payment form the spouse or former spouse's FHSA - use the first home saver account transferring form.
Bankruptcy	B	Bankruptcy trustee payment - you must sight bankruptcy evidence.
Purchasing a home jointly with another FHSA holder	J	The account holder is purchasing or constructing a home jointly with another FHSA holder who qualifies to withdraw their money to purchase or construct the home.
Purchase a home	Q	To purchase or construct a home.
Transfer to another FHSA provider	P	The account holder is transferring their total account balance to another FHSA provider.
Voluntary contribution to super	V	The account holder wants to contribute their total account balance to super.
Compulsory contribution to super, including part contribution to super	S	The account holder has: become ineligible to hold a FHSA and they are making a contribution to super - this includes when the account holder is 65 years or over purchased or is constructing a home and the account balance from the FHSA is more than what is needed for the property - the remaining balance must be contributed to super.
Death	D	The account holder has died and you are paying the estate.
Cooling off Unsolicited offer The product disclosure statement was inadequate	C	The account is invalid due to one of these reasons.
Withdrawing an amount after turning 60 years	A	The account holder is over 60 years and wants to withdraw an amount from their account.

Approved form - closing an account

Information you must collect

You must collect and record the following information (where relevant) to meet your reporting obligations when closing an account:

the date the account was closed
the closing/payment reason code
the co-purchaser's full name
the full address of the home purchased
the amount you paid to the account holder
the date you made the payment
the amount you contributed to the super fund
the date you made the super contribution
the account holder's date of death.

The account holder must complete the account identification details and provide:

the reason for closing the account as per the reason codes
evidence where applicable.

Sample form

We have developed a sample account closure form (PDF, 88KB) you can use or adapt to suit your organisation. The sample form contains information you must include in your form in the way we have written it. This information is highlighted in the sample form with a blue background.

Only paper forms require signatures.

Family law obligations

Your obligations

Where a relationship breaks down, a FHSA may be divided between spouses under a family law obligation.

You can provide a former spouse with all or part of an account balance by:

transferring it to their FHSA
contributing it to their super fund
paying it directly to them if they are 60 years or over.

You can pay part of the balance of a FHSA under a family law obligation without closing the account.

You can only make a payment from a FHSA under a family law obligation if you sight evidence of a:

court order under the Family Law Act 1975
binding financial agreement made under the Family Law Act 1975.

If a former spouse asks you for information about an account holder's account balance, you must provide this information if they produce evidence of a family law obligation. To ask for this information, they must complete a First home saver account information request (NAT 72836) form and send it to you.

Family law payment to a former spouse's first home saver account

If the former spouse does not already have a FHSA, you can open one for them using the opening a first home saver account process.

The amount of the family law payment cannot exceed the former spouse's account balance cap. If it does exceed their cap, the entire amount must be returned to the original account and a new court order obtained.

To transfer an amount to a former spouse's account, use a First home saver accounts and family law obligations form.

The family law transfer made to a former spouse's FHSA is not a personal contribution and will not be eligible for a government contribution.

Payment to a former spouse's super

A payment from an account holder's FHSA to their former spouse's super is made using a Super contributions from a first home saver account under a family law obligation (NAT 72629) form. The former spouse must initiate the payment by completing Part 1 of the form and giving it to you along with evidence of the family law obligation.

Direct payment to a former spouse aged 60 years or over

You can pay an amount directly to a former spouse aged 60 years or over.

To pay a former spouse directly, you may use your existing processes for dealing with family law issues or create a process that best suits your business.

Definitions

Personal contribution

This is a financial contribution made by or on behalf of the FHSA holder to a FHSA. Personal contributions do not include:

government contributions
contributions of a FHSA balance as a transfer from a previous account
contributions made under a family law obligation
amounts recontributed to a FHSA that were previously paid from a FHSA.

Government contribution

This is a contribution the government pays to an individual for an income year on personal contributions made during the year. It is paid at a rate of 17%. The limit for the 2010-11 income year is $5,500 and will be indexed for future years.

Indexation of FHSA balance cap

'FHSA balance cap indexation' is the adjustment to the annual FHSA cap. This adjustment is based on increases in average weekly earnings.

The account balance cap is indexed by multiplying the account balance cap for the financial year by the indexation factor. The result is rounded down to the nearest $5,000.

The amount cannot be reduced by indexation; that is, it is not indexed if the indexation factor is less than one.

The FHSA occupancy rule

Under the 'FHSA occupancy rule', the account holder must live in the home they purchased using the funds from their FHSA for at least six months. This home also must be their main residence.

The six month period must commence within the first 12 months after they have purchased or finished building their home.

Payment rule

Under the 'payment rule', the account holder must use the money from their account in the course of buying or building their first home. This can include:

paying a deposit for the purchase of an existing home
paying a deposit or instalments for a home and land package
paying for the purchase of vacant land on which their home will be built
paying a deposit or instalments for the construction of a home on land they own
meeting incidental costs they incur in buying the home, such as legal expenses, council fees, stamp duty, building and pest inspections, finance approval and loan establishment costs.

The account holder has six months to spend the money after they close the account.

Where the account holder purchased a home before meeting a condition for release and withdrew the money at the end of the minimum qualifying period, they must pay the money to their mortgage or super within 28 days.

If an account holder meets the buying or building conditions, they also satisfy the 'payment rule'.

More information

For more information about FHSAs, refer to:

'Electronic reporting specification - first home saver accounts (FHSA) - final specification release' on the software developers page
Super contributions from a first home saver account (NAT 72537)
First home saver account information request (NAT 72943).

To obtain copies of our forms and publications or for more information, visit First home saver account - home.

Last Modified: Tuesday, 31 May 2011

Our commitment to you

We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and meet your obligations.

If you follow our information and it turns out to be incorrect, or it is misleading and you make a mistake as a result, we will take that into account when determining what action, if any, we should take.

Some of the information on this website applies to a specific financial year. This is clearly marked. Make sure you have the information for the right year before making decisions based on that information.

If you feel that our information does not fully cover your circumstances, or you are unsure how it applies to you, contact us or seek professional advice.

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