FIRST HOME SUPER SAVER SCHEME

On Monday, 16 September 2024, the Australian Tax Office (ATO) updated information of the First Home Super Saver Scheme (FHSS), and, as your your local accountants in Hobart, Hills Accounting are here to bring you up to date on this program.

The FHSS originated in 2017 and allows you to make personal voluntary contributions to your super fund to help you save for your first home.

Concessional contributions are taxed at only 15%, which is usually less than your marginal income tax rate. Assessable FHSS amounts also benefit from a 30% FHSS tax offset.

You can withdraw up to $15,000 of your voluntary contributions from any one financial year, up to a total of $50,000 across multiple years, plus associated earnings.

You don't need to be an Australian citizen or Australian resident for tax purposes to use the FHSS scheme.

It's important you request a FHSS determination before ownership of any real property transfers to you (generally following settlement of a property contract).

When you're ready to use the funds to help buy a home in Australia, you can submit a request to release your FHSS amount plus associated earnings.

Is FHSS right for me?

The FHSS is not a perfect fit for everyone. It is important that you understand the eligibility criteria, conditions of release, and if your fund will release FHSS amounts before you start saving in your super fund. At Hills Accounting Hobart, we can help you with that.

This page explains the basics of the FHSS. For technical information on the FHSS scheme, see GN 2024/1 First home super saver scheme.

You can also visit the ATO Publication Ordering Service to place an order or download our FHSS scheme essentials. This publication summarises everything to consider if you plan to use your super savings to purchase your first home.

Impacts of using the FHSS scheme

• Assessable FHSS amounts will affect your tax – you will receive a payment summary from us and you will need to include both the assessable and tax-withheld amounts in your tax return in the year in which you make the request to release.
• Your assessable FHSS released amount is not included in your assessable income for calculating family assistance and child support payments.
• If you have an outstanding debt with the ATO or another Commonwealth agency, your FHSS release amount:
  • may be offset against this debt
  • could be reduced (including to nil)
  • will take longer to be released to you.

Other considerations when using the FHSS scheme

If you use the FHSS scheme to buy your first home, you must genuinely intend to occupy the property as a home as soon as practicable after purchase and do so for at least 6 of the first 12 months from when it is practicable to occupy it.

You can't use the FHSS scheme to purchase:

• vacant land – but the contract can be for the construction of a home on vacant land, provided ownership of the vacant land has not transferred to you before applying for a FHSS determination. The contract to construct the home on the vacant land must be entered into within 12 months (or other period allowed) from the date you requested a FHSS release
• any premises not capable of being occupied as a residence
• a houseboat
• a motor home.

Eligible contributions

You can only access eligible contributions that have been made on or after 1 July 2017 under the FHSS scheme, these include:

• voluntary concessional contributions – including salary sacrifice amounts or non-concessional contributions you have claimed or intend to claim a tax deduction for (taxed at 15% in your fund)
• voluntary non-concessional contributions – including personal after-tax contributions you haven't claimed a tax deduction for (not taxed in your super fund)
• certain KiwiSaver and other transfer amounts from foreign super funds. For more information, see GN 2024/1 First home super saver scheme.

An eligible KiwiSaver amount must be included in your FHSS determination request as a single personal voluntary (after tax) contribution, with the date it was credited to your Australian super fund account. You can't split this contribution over different financial years.

Contributions you make for FHSS purposes are not accounted for separately in your super account(s), and you're not required to withdraw them to purchase a home if your circumstances change. If you don’t release contributions under the FHSS scheme, they remain part of your super interest, until you meet another condition of release for example, retirement.

Ineligible contributions

The following contributions are not eligible:

• contributions made before 1 July 2017
• super guarantee (SG) contributions made by your employer
• contributions to defined benefit interests or constitutionally protected funds
• mandated employer or member contributions made for you under an award or industrial agreement
• member contributions made for you by your spouse, parent or other friends or family
• amounts you receive under a contributions-splitting arrangement
• government co-contributions
• contributions under a structured settlement or personal injury order
• amounts contributed to super as part of the small business CGT concessions
• amounts transferred from a KiwiSaver scheme that are Australian-sourced amounts or returning New Zealand-sourced amounts
• applicable fund earnings from a foreign fund transfer you elect to include in the receiving fund's assessable income
• contributions that are mandatory under a state or territory law or the rules of a fund
• excess concessional or non-concessional contributions, which are not eligible even if they otherwise would have been before they were identified to be in excess of the relevant contribution cap for the applicable income year
• COVID-19 early release of superannuation re-contributions.

If there are any of these amounts in your request for a FHSS determination, your request may be delayed or cancelled.

How much you can access

The amount you can access under FHSS is limited to $15,000 of your voluntary contributions from any one financial year, up to a total of $50,000 across multiple years, plus associated earnings.

You can't use the FHSS scheme to access concessional and non-concessional contributions that exceed the legislated contributions caps. You can check your eligible contributions 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 amount you can have released.

Note: Associated earnings are a notional amount of earnings calculated at the shortfall interest charge rate.

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 your eligible personal voluntary super contributions you haven't claimed a tax deduction for (non-concessional contributions)
• 85% of your eligible salary sacrifice contributions (concessional contributions)
• 85% of eligible personal voluntary super contributions you've claimed a tax deduction for (concessional contributions)
• deemed earnings associated with these contributions (this will be different from actual earnings in your super fund).

When you can sign your contract

You must request a FHSS determination before ownership of any real property transfers to you (generally following settlement of a property contract, including a contract to purchase vacant land).

Once ownership of real property has transferred to you, you're no longer eligible to request a FHSS determination. For more information see GN 2024/1 First home super saver scheme.

For information on when you need to sign a contract to buy or build your first home, see Signing a contract for a home and notifying us.

As you can see from this article there is a lot to take into consideration when thinking about the FHSS and how it might help you to be a first home buyer, and that is where Hills Accounting can help you.

Remember, this article is general in nature and doesn’t take into account your specific objectives, financial situation, or needs. For advice tailored to your circumstances, have a chat with us at Hills Accounting Hobart.

For even more helpful information, email us today at admin@hillsaccounting.com.au or call us on 03 62737800