Introduction
On 11 May 2021, as part of the 2021–22 Federal Budget, The Australian Government announced changes to the First Home Super Saver (FHSS) scheme to increase the contributions that can be counted towards the maximum releasable amount to $50,000 and improve the scheme’s operation. This increase will come into effect from 1 July 2022.
What is the First Home Super Saver Scheme?
To save for your first home, you can make optional concessional (before-tax) and non-concessional (after-tax) contributions to your super fund starting 1 July 2017.
You can then have your voluntary contributions, as well as any associated earnings, released to assist you in buying your first home, from 1 July 2018. To apply for the release of these funds, you must meet the eligibility requirements.
Who is eligible for the First Home Super Saver Scheme?
You can use this scheme if you are a first home buyer and both of the following apply:
- You want to live in the premises you purchased as soon as possible.
- You intend to live in the property for at least six months during the first 12 months of ownership.
- You are 18 years old or older, however, make eligible contributions to your super before you reach the age of 18.
- You have never owned 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)
- You have not previously made an FHSS release request under the FHSS scheme.
Eligibility is determined on a case-by-case basis. Please visit First Home Super Saver Scheme for more information.
Increase to the maximum amount that can be released
Eligible individuals will be allowed to include contributions up to $50,000 (currently $30,000) in their maximum releasable amount starting from 1 July 2022. Eligible contributions made from 1 July 2017 can count towards the total amount released.
Request for a Release of Funds
Take into consideration the following when requesting the release of funds:
- Under the FHSS scheme, you can only request a release once;
- You should expect to get your funds within 15 to 25 business days;
- You must first obtain an FHSS determination before signing the property contract. You can then request a release of funds within 14 days of signing the contract.
With the new legislation, if you request an FHSS determination before 1 July 2022, you will be only entitled to $30,000. In this case, you will not be able to request a second release for the difference between $50,000 and $30,000 on a later date.
Greater Flexibility to correct errors
Additional modifications will improve the experience for first-time home owners. These changes will provide more flexibility by allowing the Commissioner of Taxation to alter and revoke FHSSS requests with greater discretion.
Individuals will also be able to withdraw or change their requests before receiving an FHSSS amount, and those who withdraw their requests should be able to reapply for FHSSS releases in the future.
These modifications will also allow the Commissioner to return FHSSS money to super funds if it has not yet been released to the individual, and clarifying that the money returned to super funds is treated as funds’ non-assessable non-exempt income and does not count towards the individual’s contribution caps.
These changes are set to take effect on 1 July 2022, with retroactive application beginning 1 July 2018.
If you’d like to learn more about the First Home Super Saver Scheme, please contact us for more information.
This page contains information that is of a general nature. It does not take into account your specific requirements or circumstances. Before making any financial decisions, you should consider your individual financial situation, objectives, and requirements, and seek financial advice.