What Is the FHSS Scheme?
The First Home Super Saver (FHSS) scheme helps first-time home buyers save for a deposit by making voluntary contributions to their superannuation. These savings grow in a tax-friendly environment and can be withdrawn later to purchase or build a first home.
By using this scheme, many buyers can accelerate their path to homeownership. The government introduced the FHSS in the 2017–2018 Federal Budget as a way to ease the financial pressure caused by rising housing prices.
How Tax Works in the FHSS Scheme
When you withdraw money under the FHSS scheme, the tax treatment depends on the type of contribution:
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Before-tax or tax-deductible contributions (such as salary sacrifice) are taxed at your marginal rate, but you receive a 30% tax offset.
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After-tax contributions are not taxed when withdrawn.
This setup allows many buyers to reduce their overall tax burden while saving for a deposit.
Who Can Withdraw Under the FHSS Scheme?
Eligible Contributions
You can only withdraw voluntary contributions you personally made into your superannuation. These may include:
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Salary sacrifice (before-tax)
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After-tax personal contributions
Ineligible Contributions
You cannot withdraw the following under the FHSS scheme:
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Employer Superannuation Guarantee (SG) contributions
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Contributions from a spouse or child
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Government co-contributions
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Contributions from others (unless via a salary sacrifice agreement)
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Voluntary contributions to defined benefit or constitutionally protected funds
To use the FHSS, your contributions must be both voluntary and personal.
Example: Sam and Charlie’s Savings Strategy
Sam and Charlie each earn $70,000 per year and are saving for their first home.
Saving Outside Super
If they each save $10,000 in a regular bank account:
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Their income over $45,000 is taxed at 34.5%, including the Medicare Levy.
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Their combined tax on the $20,000 savings is $6,900.
Saving Through FHSS
If they each contribute $10,000 into super under the FHSS:
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They pay 15% tax on the contributions → $1,500 each.
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Upon withdrawal, they pay 4.5% effective tax (after the 30% offset) → $450 each.
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Total tax per person = $1,950 → $3,900 combined.
Summary
By using the FHSS scheme, Sam and Charlie save $3,000 in tax compared to saving outside super.
FHSS Scheme Limits and Restrictions
Withdrawal Limit
Each person can withdraw up to $50,000 of eligible contributions (plus associated earnings) through the FHSS.
Annual Contribution Limit
You can contribute a maximum of $15,000 per year towards the FHSS scheme. These must be voluntary contributions.
What Can You Buy with FHSS Funds?
Eligible Property Types
You can use the FHSS scheme to buy any residential property in Australia, including:
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Existing homes
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New homes
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Vacant land (if you plan to build)
However, the scheme does not cover:
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Houseboats
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Motor homes
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Commercial properties (e.g. shops or offices)
Using FHSS to Build a Home
Yes, you can use FHSS funds to buy land and build your first home. The key requirement is that you intend to live in the property.
Final Thoughts
The FHSS scheme gives first-time buyers a tax-effective way to save for a home deposit. But it comes with specific rules and limits. Always check the latest regulations on the ATO website or speak with a qualified financial adviser before making decisions.
