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  • 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 of super.

    On this page:

    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.

    You can use this scheme if you are a first home buyer and both of the following apply:

    • You either live in the premises you are buying, or intend to as soon as practicable.
    • You intend to live in the property for at least six months within 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.

    Important things to know

    There are a number of important things you need to know if you plan to use the FHSS scheme:

    • You can only apply for release once.
    • Don't sign your contract to purchase or construct your home until after we have released the first FHSS amount to you or you may be liable to pay FHSS tax.
    • After you have requested the release, it may take up to 25 business days for you to receive your money.

    Note: Due to our office shutdown over the Christmas period, processing times may be affected depending on when your application is lodged. The shutdown period will impact applications made between Friday 21 December 2018 to Wednesday 2 January 2019.

    • You have 12 months from the date the first FHSS amount is released to you, to do one of the following
      • sign a contract to purchase or construct your home - you must notify us within 28 days of signing the contract
      • recontribute the assessable FHSS amount (less tax withheld) into your super fund and notify us within 12 months of the first FHSS amount being released to you.
       
    • If you don't notify us or you choose to keep the FHSS money, you will be subject to the FHSS tax. This is a flat tax equal to 20% of your assessable FHSS released amounts and not the total amount released.

    Who is eligible

    You can start making super contributions from any age, but you can't request a release of amounts under the FHSS scheme until you are 18 years old.

    Also, you must 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)
    • 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.

    Financial hardship provision

    You may still be eligible even if you have previously owned property in Australia, if we determine that you have suffered a financial hardship that resulted in a loss of ownership of all property interests. The types of events that could result in the loss of property interests include:

    • bankruptcy
    • divorce, separation from a de-facto partner, or a relationship breakdown
    • loss of employment
    • illness
    • being affected by a natural disaster
    • being eligible for early access to superannuation.

    If you want to be considered under the financial hardship provision you can apply from 1 July 2018 by completing a First home super saver scheme - hardship application form. You should apply before you start saving, so that we can determine if the hardship provision applies to you.

    You must provide evidence with your application that demonstrates the link between the loss of your property and your hardship event.

    If we accept that you have suffered a financial hardship, you must also meet the following at the time you lodge your First home super saver scheme - hardship application form:

    • 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.

    Next step:

    How you can save in super

    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 you should:

    • check that your nominated super fund (or funds) will release the money
    • ask your fund about any fees, charges and insurance implications that may apply
    • check that your super fund has your current contact details – ensure your name matches what we have
    • 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 if 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.

    Certain Kiwisaver and other foreign fund transfer amounts are eligible contributions for calculating your maximum FHSS release amounts. For more information see GN 2018/1 First home super saver scheme.

    See also:

    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.
    • If 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.

    Applying to release your savings

    You can check your balance with your super fund (or funds) 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.

    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.

     Maximum release amount

    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.

    See also:

    Requesting a determination

    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 by applying online using your myGov account linked to the ATO.

    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. 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.

    Requesting the release of your savings

    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. You can do this by applying online using your myGov account linked to the ATO.

    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.

    See also:

    Receiving your amount

    We will issue a release authority to your super fund (or funds) requesting they send your FHSS release amounts to us.

    It will take approximately 25 business days for your fund to release your money and for us to pay it to you.

    Note: Due to our office shutdown over the Christmas period, processing times may be affected depending on when your application is lodged. The shutdown period will impact applications made between Friday 21 December 2018 to Wednesday 2 January 2019.

    Before we send the balance of the released amount to you we will:

    • withhold the appropriate amount of tax
    • offset the remaining amount against any outstanding Commonwealth debts.

    A payment summary will be sent to you at the end of the financial year. It will show your assessable FHSS released amount, which is comprised of:

    • 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.

    Withholding tax

    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.

    Completing your tax return

    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).

    See also:

    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.

    After your savings have been released

    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, if 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 (or funds). 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 FHSS tax. This is a flat tax equal to 20% of your assessable FHSS released amounts and not the total amount released.

    You have 12 months from the date the first FHSS amount is released to do one of the following:

    • sign a contract to purchase or construct your home and notify us within 28 days of signing the contract
    • recontribute the assessable FHSS amount (less tax withheld) into your super fund, and notify us within 12 months from the date the first FHSS amount is released to you.

    If you don't notify us or you choose to keep the FHSS amount, you may be subject to the FHSS tax.

    You can notify us online using your myGov account linked to the ATO.

    See also:

    Last modified: 28 Nov 2018QC 54085