How does the First Home Super Saver Scheme work?

Here's how hopeful Aussie home buyers can take advantage of the First Home Super Saver Scheme.

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Under the First Home Loan Super Saver Scheme, first home buyers can withdraw a portion of their extra super contributions and use them a deposit for a property. An individual can withdraw a maximum of $15,000 per financial year, with an overall limit of $30,000 total.

  • In the 2021 federal budget, the total withdrawal limit of the First Home Super Saver Scheme increased from $30,000 to $50,000. We will publish more information about changes to the scheme as they come to light.

This scheme benefits buyers because:

  • You might earn a higher return on the deposit money as the return on a super account is higher than a regular savings account.
  • You can salary sacrifice these contributions into your super account so they come from your pre-tax income. This means you’ll avoid being taxed for making deposits.
  • The money in the account will be taxed at 15%, meaning most Australians using the scheme will pay much less tax on their contributions.
  • When it’s time to withdraw funds, you’ll be taxed at a marginal rate less a 30% offset.

The First Home Super Saver Scheme was introduced in the 2017-2018 Federal Budget.

How the first home super saver scheme works.

The First Home Super Saver Scheme explained

Depositing

You start by making voluntary super contributions into your superannuation account. If your employer agrees, you can make this through your pre-tax income to save on tax.

If your employer doesn’t agree to salary sacrifice or if you’re self-employed, you can contribute your post-tax income into the scheme and then make tax deduction claims on personal contributions afterwards. Money that’s deposited through post-tax income won’t be taxed when you withdraw it.

You can contribute up to $30,000 in total using the scheme, but each year has a maximum limit of $15,000 (note: this has increased to a total of $50,000).

It's also important to remember that there are limits on the amount of voluntary superannuation you can save in a year.

While you’re saving

While you’re saving this money in your super fund, it’ll be taxed at 15% rather than your regular tax rate. The earnings on any money you’ve deposited will also be taxed at this rate. Given that most Australians pay 30% or more in tax this is a big saving. If you salary sacrificed $1,000 of pre-tax income into your super fund you'll end up with $850 after tax. If that money went into your bank account at your normal tax rate (assuming you're earning over $45,000 a year) you'd only pocket around $675.

When you’re ready to withdraw

When you’re ready to withdraw you have to apply with the Australian Taxation Office (ATO), who is responsible for the scheme. You can apply for a First Home Super Saver determination before signing a contract to purchase or construct a home.

Pre-tax contributions will be taxed at your marginal rate minus a 30% offset. Your marginal rate is basically the per-dollar amount you get taxed in your tax bracket.

Income bracketTax
0 – $18,200None
$18,201 – $45,00019c for each $1 over $18,200
$45,001 – $120,000$5,092 plus 32.5c for each $1 over $45,000
$120,001 – $180,000$29,467 plus 37c for each $1 over $120,000
$180,001 and over$51,667 plus 45c for each $1 over $180,000

Source: ATO

Post-tax contributions will not be taxed when you withdraw them.

You can also withdraw the earnings that your money accrues while in your super account. Because you’ll be depositing these amounts into an account which already has non-First Home Super Saver Scheme funds in it, the amount of earnings you can withdraw will be decided using a percentage made up of the 90 day Bank Bill Swap Rate plus 3%.

Who is eligible for the scheme?

To qualify for the first home super save scheme you must meet the following criteria:

  • You must be 18 or older to access your super contributions.
  • You must live in the property for at least six months, within the first 12 months of ownership.
  • You have never owned a property before, including an investment property.
  • You must not be using your contribution to purchase a houseboat, motor home or vacant land.
  • You can only make use of the scheme once.

The most common questions about the First Home Super Saver Scheme

  • Can my partner and I access the scheme together? Yes. Applicants using the scheme are assessed individually and can purchase a property together. So if you and your partner meet the eligibility criteria and have made voluntary contributions to your super funds you can make double use of the scheme, doubling your maximum amount to $60,000.
  • What else should I be wary of? Because any money deposited under this scheme will be at the mercy of your super account performance, comparing super accounts and also updating your risk appetite will be crucial. You can compare super accounts in our guide.
  • Is there a minimum amount I need to deposit to be able to use this scheme? There has been no mention of a minimum amount so far.
  • What if I’m self-employed or my employer doesn’t offer salary sacrificing? If you’re self-employed or your employer doesn’t want to offer salary sacrificing, the scheme is still available. These first home buyers will be able to deposit their post-tax income and then reconcile these deposits during tax time, taking advantage of tax deductions for the contributions.
  • How do super account returns compare to regular savings accounts returns? According to research by Chant West, 10-year returns on growth super funds averaged around 8%:
Fund and investment option10-year return (p.a to June 2020)
AustralianSuper Balanced8.8%
UniSuper Balanced8.7%
HostPlus Balanced8.6%
Cbus MySuper8.5%
CareSuper Balanced8.4%
QSuper Balanced8.4%
VicSuper MySuper8.4%
Equip Balanced Growth8.3%
Prime Super MySuper8.1%
Vision Super Balanced Growth8.1%

Source: Chant West

Compare a selection of savings account rates

Note that this doesn’t take into account fees, taxes and commissions. Also note that past performance doesn’t give an indication of how these accounts will perform in the future.

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UBank UHomeLoan Variable Rate
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Westpac Flexi First Option Home Loan
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Australian Unity Health, Wealth and Happiness Package Fixed Home Loan
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loans.com.au Smart Booster Discount Investor Variable Home Loan
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If you have an owner occupier loan with loans.com.au you can also get this very low rate variable mortgage for your investment property. Principal and interest repayments. Add an offset account for an additional 0.10% on your interest rate. Get your loan processed fast and settle within 30 days.
St.George Basic Home Loan
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homeloans.com.au Low Rate Home Loan with Offset
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IMB Budget Home Loan
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$0 p.a.
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Newcastle Permanent Building Society  Premium Plus Package Fixed Rate
2.19%
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$2,000 refinance cashback
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IMB Budget Home Loan
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$0 p.a.
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UBank UHomeLoan Fixed
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Well Home Loans Balanced Variable
2.17%
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ME Flexible Home Loan Fixed with Members Package
1.99%
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IMB Fixed Rate Home Loan
1.89%
2.87% p.a.
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Bank of Melbourne Basic Home Loan
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2.51% p.a.
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$0 p.a.
$593.01
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UBank UHomeLoan Fixed
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Newcastle Permanent Building Society  Premium Plus Package Fixed Rate
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Suncorp Home Package Plus Fixed
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Bank of Melbourne Advantage Package Fixed Home Loan
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Well Home Loans Balanced Variable
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BankSA Advantage Package Fixed Home Loan
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HSBC Home Value Loan
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Bank of Melbourne Basic Home Loan
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Newcastle Permanent Building Society Fixed Rate Home Loan
2.29%
4.11% p.a.
$0
$0 p.a.
95%
$577.55
$2,000 refinance cashback
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ME Basic Home Loan
2.58%
2.60% p.a.
$0
$0 p.a.
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BankSA Basic Home Loan
2.49%
2.51% p.a.
$0
$0 p.a.
80%
$593.01
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UBank UHomeLoan Fixed
1.75%
2.31% p.a.
$0
$0 p.a.
80%
$537
Limited time offer.
Fix your mortgage for 1 year with a very competitive rate and no ongoing fees. Apply by 30 June 2021 and settle within 90 days to get this low rate.
Newcastle Permanent Building Society Premium Plus Package Home Loan
2.94%
3.34% p.a.
$0
$395 p.a.
80%
$628.65
$2,000 refinance cashback
New borrowers or refinancers can get a discounted rate with this package loan. $2,000 cashback for eligible refinancers borrowing $250,000 or more.
Suncorp Back to Basics Home Loan
2.59%
2.60% p.a.
$0
$0 p.a.
90%
$600.83
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loans.com.au Smart Booster Discount Variable Home Loan
1.99%
2.47% p.a.
$0
$0 p.a.
$554.81
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IMB Fixed Rate Home Loan
1.97%
2.81% p.a.
$449
$6 monthly ($72 p.a.)
95%
$553.31
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Newcastle Permanent Building Society Real Deal Home Loan
2.59%
2.63% p.a.
$595
$0 p.a.
80%
$600.83
$2,000 refinance cashback
$2,000 cashback for eligible refinancers borrowing $250,000 or more.
ME Flexible Home Loan With Member Package
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80%
$600.83
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