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.

Updated

From 1 July 2018 first home buyers can withdraw a portion of their extra super contributions made since July 2017 and use them a deposit for a property. An individual can withdraw a maximum of $30,000 using the scheme.

This 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.

How the first home super saver scheme works.

So how does it work?

Depositing

Starting from 1 July 2017, you’ll be able to make voluntary super contributions into your 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.

While you’re saving

While you’re saving this money, 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 $37,000 a year) you'd only pocket around $675.

When you’re ready to withdraw

Withdrawals can be made from 1 July 2018, and when you’re ready to do so you’ll be dealing with the Australian Taxation Office (ATO) who is responsible for the scheme.

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. So if you’re in the $37,001 - $87,000 bracket for example, your marginal rate is 32.5c or 32.5% of every $1 over $37,000.

Income bracketTax
0 – $18,200None
$18,201 – $37,00019c for each $1 over $18,200
$37,001 – $87,000$3,572 plus 32.5c for each $1 over $37,000
$87,001 – $180,000$19,822 plus 37c for each $1 over $87,000
$180,001 and over$54,232 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 have never owned a property before, including an investment property.
  • You cannot use your contribution to purchase a houseboat, motor home or vacant land.
  • You can only make use of the scheme once.

Compare a selection of savings account rates

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 if I need to access the money for a non-home-deposit-related emergency? Details have not been given as to how this will work. With regular super accounts, accessing your super early usually requires that you’re in severe financial hardship, are temporarily or permanently disabled, are diagnosed with a terminal illness, or on compassionate grounds. Compassionate grounds can include medical bills, funeral costs and more.
  • 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.
  • What if you want to buy a property before 1 July 2018? Unfortunately you will not be able to benefit from this scheme if you're buying before the withdrawals period starts.
  • How do super account returns compare to regular savings accounts returns? According to research by Chant West in 2016, median returns for super funds with a growth investment option were 3% for the 2015/2016 financial year. The top 10 performing funds for 2015/16 according to Chant West were:
Fund and investment optionReturn - 1 year to June 2016
QSuper Balanced7.6%
BUSSQ Balanced Growth7.0%
UniSuper Balanced5.9%
Catholic Super Balanced (MySuper)5.7%
Cbus Growth (Cbus MySuper)5.5%
MTAA My AutoSuper (Balanced)5.5%
REI Super Trustee Super Balanced5.4%
Statewide Super MySuper5.1%
HOSTPLUS Balanced5.0%
AustralianSuper Balanced4.5%

Source: Chant West

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.

Start comparing home loans now

Data indicated here is updated regularly
$
Loan purpose
Offset account
Loan type
Repayment type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
HSBC Home Value Loan - Promotional Offer (Owner Occupier P&I)
2.65%
2.66%
$0
$0 p.a.
80%
Get a low interest rate loan with no ongoing fees. Plus you can make extra repayments and free redraw online.
UBank UHomeLoan Variable Rate - Discount offer for Owner Occupiers, P&I Borrowing over $200,000
2.59%
2.59%
$0
$0 p.a.
80%
Enjoy flexible repayments, a redraw facility and the ability to split your loan. Plus, pay no application or ongoing fees.
Suncorp Back to Basics Home Loan - Better Together Special Offer $150k+ LVR<=90% Incl. LMI (Owner Occupier, P&I)
2.78%
2.79%
$0
$0 p.a.
90%
Get one free online redraw per month and pay no ongoing fees. Application fees are waived for loans above $150,000. Eligible refinancers can receive a cashback of $2,000 or more.
Bankwest Complete Home Loan Package Variable - $200k+ LVR <=80% (Owner Occupier, P&I)
2.73%
3.18%
$0
$395 p.a.
80%
A low variable rate loan with a 100% offset account and package discounts.
ME Flexible Home Loan Fixed with Members Package - 2 Year Fixed Rate LVR <= 80% (Owner Occupier, P&I)
2.49%
3.41%
$0
$395 p.a.
80%
Lock in a competitive rate for owner occupiers for two years. Comes with a 100% offset account.
Greater Bank Great Rate Discount Variable with Family Pledge Home Loan - Up to 110% LVR
3.11%
3.12%
$0
$0 p.a.
110%
Pay no deposit or LMI and get a discounted rate with this family pledge loan. Requires a family member to act as guarantor. NSW, QLD and ACT only.
IMB Fixed Rate Home Loan - 2 Year Fixed (LVR 90% Owner Occupier, P&I, NSW and ACT borrowers only)
2.49%
3.15%
$449
$6 monthly ($72 p.a.)
90%
NSW and ACT customers only. 2 years fixed interest terms and free access to redraw facility online. Available with a 5% deposit.
CUA Fixed Rate Home Loan - 3 Year Fixed (Owner Occupier, P&I)
2.69%
4.04%
$600
$0 p.a.
95%
Pay no ongoing fees and lock in your rate for 3 years to organise your budget. Eligible new home buyers with low deposits can apply for the First Home Loan Deposit Scheme with this lender and avoid LMI costs.
loans.com.au Essentials - Variable (Owner Occupier, P&I)
2.79%
2.81%
$0
$0 p.a.
90%
A simple mortgage with a competitive interest rate and no application or monthly fees. Borrow up to $1000000 from a convenient online lender.
IMB Fixed Rate Home Loan - 3 Year Fixed (LVR 90% Owner Occupier, P&I, NSW and ACT borrowers only)
2.49%
3.10%
$449
$6 monthly ($72 p.a.)
90%
NSW and ACT customers only. 3 years fixed interest terms and free access to redraw facility online. Available with a 5% deposit.
ME Basic Home Loan - LVR <=80% (Owner Occupier, P&I)
3.17%
3.19%
$0
$0 p.a.
80%
This variable rate loan keeps the features simple and fees low. This loan is offered by a 100% online lender.
Gateway Bank Low Rate Essentials Variable Rate Home Loan - Special offer LVR up to 80% and over $500k (Owner Occupier, P&I)
2.76%
2.79%
$0
$0 p.a.
80%
A competitive, flexible variable rate mortgage for home buyers borrowing above $500,000. Eligible new home buyers with low deposits can apply for the First Home Loan Deposit Scheme with this lender and avoid LMI costs.
ME Flexible Home Loan With Member Package - LVR <=80% $400k up to $699,999 (Owner Occupier, P&I)
2.84%
3.29%
$0
$395 p.a.
80%
Unlock a range of savings with this competitive package home loan offer. Offset account and redraw facility included.
ANZ Breakfree Package Home Loan - 2 Year Fixed (Owner Occupier, P&I)
2.29%
4.02%
$0
$395 p.a.
90%
This 2 year fixed ANZ Breakfree Package rate comes with package discount and product bundle.
Macquarie Bank Offset Home Loan Package - LVR ≤ 90% (Owner Occupier, P&I)
3.14%
3.40%
$0
$248 p.a.
90%
Enjoy a an offset account with an LVR of ≤ 90% when you borrow up to $750,000.
loading

Compare up to 4 providers

Related Posts

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms of Use, Disclaimer & Privacy Policy and Privacy & Cookies Policy.
Ask a question
Go to site