by Duc Hong

The First Home Super Saver scheme (FHSS) was designed to assist first home buyers to save using superannuation. Eligible contributions made since 1 July 2017 include voluntary personal and salary sacrifice contributions (both concessional and non-concessional) but exclude employer SGC and spouse contributions. Some Kiwi Saver and foreign fund transfer amounts are also eligible for the scheme.

In a strong and rising housing market, the FHSS may be an option for your clients. Some argue its too complicated and too difficult, see First Home Super Saver not worth the trouble. But, if your client meets the criteria, this may be the leg-up they need. Below are the criteria and features.

Eligibility to apply for a release under the scheme includes

• Have never owned property in Australia – includes an investment property, vacant land, commercial property, a lease of land in Australia or a company title interest in land in Australia (Unless eligible under financial hardship);
• Must be for an Australian property;
• Must intend to live in the property as soon as practicable and for at least six months in the first year;
• Be over 18 years old.

Key Scheme Features

• Must apply for and receive a determination before signing any purchase contract;
• Can apply for release of up to $15,000 of contributions made in any one year, up to a maximum of $30,000. Deemed earnings on those contributions will also be released;
• Rules apply to the order in which contributions can be withdrawn on a first in first out basis to maximise the benefit of the scheme;
• Can withdraw 100% of non-concessional and 85% of concessional contributions;
• Access to the scheme is not impacted where the individual is buying a property with others (even their spouse) who may not qualify for the scheme;
• Withdrawals made under the scheme will not affect social security benefits as they don’t count towards the income test;
• The scheme is independent of other concessions for first home buyers such as the First Home Owner’s Grant;
• Taxable amounts withdrawn under the scheme (concessional contributions and earnings) are treated as assessable income in the year they are withdrawn but receive a 30% tax offset;
• The deemed earnings are based on the SIC rate which is currently at 3.02% January – March 2021);
• The ATO advises it can take up to 25 business days to process applications and approve the release of funds, so it is recommended to be organised;
• If a property purchase does not proceed, the released funds must be returned to super.

It is possible that some people have made contributions during the past few years that would qualify for the scheme, even though that was not their original intention.  It may be worthwhile discussing with those clients that are eligible.