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First home buyers able to save with super

First home buyers able to save with super

New legislation aims to help first home buyers get into the property market by using superannuation.

The Australian government first proposed the First Home Super Saver Scheme in the Federal Budget in May 2017 to help reduce the barriers preventing people from entering the property market.

The proposal became law in December 2017 and contributions from 1 July 2017 were eligible for the scheme.

The government expects that the scheme might help first home buyers build their savings for a home deposit faster by providing the concessional (contributions made with pre-tax income) tax treatment within super.

You can apply to release voluntary contributions along with associated earnings to a maximum of $15,000 in any one financial year and $30,000 in total across all years.

Who qualifies?

To be eligible for the scheme you need to:

  • have not owned a home before in Australia
  • be 18 years old or over
  • have not previously released First Home Super Saver funds
  • live or intend to live in the property you are buying as soon as practical (as determined by the Australian Taxation Office [ATO])
  • intend to live in the property for at least six months of the first 12 months you own it (after it is practical to move in)
  • buy the type of property which is included in the Scheme

How do you make contributions?

Concessional (before tax) contributions

You can ask your employer to redirect some of your salary before it is taxed.

These are often called salary sacrifice arrangements and can be an effective way to reduce your taxable income. These are taxed at 15%.

Non concessional (after tax) contributions

You can make personal contributions from your after tax salary, up to a limit, which you can check on at the ATO website

If you earn equal to or less than $36,813 a year and you make a non-concessional contribution of $1,000, the government also makes a co-contribution to the maximum value of $500.

If you earn between $36,813 and $51,813 per year, you may still be eligible for a smaller co-contribution, however the amount will depend on your income and how much you contribute.

Generally, this method may be chosen to take advantage of the government co-contribution, whereas the concessional contributions can have tax advantages as outlined below.

The ATO uses payment ordering rules to calculate your maximum release amount. You can read more under 'contributions you can make' on the ATO website.

What are the tax advantages of the First Home Super Saver Scheme?

Released amounts (with the exception of after tax contributions) to buy your first home will be taxed at either your marginal tax rate less a 30% offset or 17% if the Commissioner of Taxation is unable to estimate your expected marginal rate, and are allowed from 1 July 2018.

For example, by taking advantage of the FHSSS, the Federal Government estimates that a taxpayer earning $65,000, who makes $6,000 in pre-tax contributions each year could save an extra $7,416 more for a home than if they had put their savings into a standard bank account as per the explanation below.¹

  Saving through super Saving outside super
Tax Rate 17.5%
Made up of 2.5% tax (plus Medicare levy) on withdrawn amount and pre-tax super contributions were taxed at 15%.
The applicable marginal tax rate for the 2017-18 financial year.
Before tax contributions Salary sacrifice (before-tax) $6,000 into super Invest $6,000 (before tax) into a standard deposit account
Savings after 5 years $27,144 $19,728
  Additional savings through super = $7,416¹  

How do you release the money?

From 1 July 2018, you can apply through the ATO website to the Commissioner of Taxation. If approved, the Commissioner of Taxation will issue a release authority to your super fund/s and the requested amount/s will be sent to the ATO.

The ATO will withhold the appropriate amount of tax (your marginal tax rate less 30% or 17% if the Commissioner is unable to estimate your expected marginal rate) and then send the balance to you.

The ATO says it will take approximately 12 business days to process your request. A payment summary will also be sent which will include the total amount of tax withheld.

This amount needs to be included in your tax return for that financial year.

Once your money is released you have up to 12 months to sign a contract to purchase or construct a home. Once you have requested a release, you’re unable to request another one.

What are the considerations?

There may also be some fees, charges and insurance implications that occur when the money is released.

Read more about the First Home Super Savers Scheme or speak to the Essential Super team on 13 4074.

1 The Federal Government's online estimator assumes that contributions are made from 2017-18, and accounts for announced future changes in the rates of the taxes modelled. Taxable income and salary sacrifice amounts are held constant over time. When calculating the amount available for withdrawal, the estimator assumes that contributions are made each year until reaching the $30,000 limit on pre-tax contributions that can be subsequently withdrawn under the scheme. The interest rate paid on savings in a deposit account is assumed to be fixed at 2% a year (this reflects average retail deposit rates in April 2017). The deemed earnings rate applied to savings in superannuation is fixed at the shortfall interest charge (SIC) rate for April to June 2017 (4.78% a year). For more information, visit

Taxation considerations are general and based on present taxation laws and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information. Colonial First State Investments Limited is also not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and you should seek tax advice from a registered tax agent or a registered tax (financial) adviser if you intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.


This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. Investors should consult a range of resources, and if necessary, seek professional advice, before making investment decisions in regard to their objectives, financial and taxation situations and needs because these have not been taken into account. Colonial First State Investments Limited ABN 98 002 348 352, AFSL 232468 (CFS) is the issuer of interests in Commonwealth Essential Super ABN 56 601 925 435 (Essential Super) and is a wholly owned subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124 (Bank). This document may include financial product advice but does not consider your individual objectives, financial circumstances or needs. You should read the Product Disclosure Statement (PDS) for Essential Super before making any decision regarding this product. Download the PDS or call us on 13 40 74 for a copy. The Bank and its subsidiaries do not guarantee the performance of Essential Super and an investment in this product is subject to risk, loss of income and capital invested. An investment in Essential Super is via a superannuation trust and is therefore not an investment in, deposit with or other liability of the Bank or its subsidiaries. Where we mention ‘we’, ‘us’ or ‘our’, we mean CFS.