Great news for first home buyers! The government has updated the First Home Super Saver Scheme (FHSSS) to make it more flexible for users. The FHSSS allows you to withdraw certain voluntary superannuation contributions (along with associated earnings) to help purchase or build your first home.

While there are specific rules regarding withdrawal amounts, you can withdraw up to $50,000 of eligible voluntary contributions made since July 1, 2017. This includes contributions of up to $15,000 per year, capped at a total of $50,000. Using the FHSSS can also provide tax benefits, especially if you make salary-sacrifice contributions or personal deductible contributions. Your advisor can assist in creating a tax-effective savings strategy.

How to Access Your Savings

To use these savings for your first home, you’ll need to follow a process. First, request a determination from the ATO, which will inform you of your maximum FHSSS release amount. After receiving this determination, you can request the release of your funds (also managed by the ATO). Once you receive the funds, you must notify the ATO when you sign a contract to purchase or construct your home, which generally needs to happen within 12 months of requesting the fund release.

You can request the release either before signing the contract or within 14 days after signing. If you miss these timeframes, you may be subject to FHSSS tax on the released funds.

Upcoming Changes Effective September 15, 2024

Recent legislative changes, effective September 15, 2024, aim to improve the process for scheme participants and address previous challenges faced by first home buyers. Key changes include:

• Extended Timeframe for Release Requests: Previously, you had 14 days to request a release after signing a contract. This will be extended to 90 days, although you still need to obtain a determination from the ATO before making a release request.
• Expanded Eligibility for Determination Requests: Earlier, you needed to apply for an ATO determination before signing a contract. Now, you only need to apply for a determination by the time you complete the contract (i.e., at settlement).
• More Flexibility in Applications: The new rules allow greater flexibility in changing your participation in the scheme or correcting errors. You can withdraw your application if you change your mind, provided the ATO has not begun processing the release. Withdrawing a release request does not prevent you from making a new request in the future.

Additionally, former applicants who were unsuccessful can reapply under the new amendments, even if they currently own a home. If you applied for the FHSSS between July 1, 2018, and September 14, 2024, and were denied, the ATO will review your eligibility and contact you if you qualify, allowing you to request a release.

Get It Right

Are you close to purchasing your first home and considering accessing the FHSSS, or are you planning to make extra contributions as part of your FHSSS savings strategy? Contact us to ensure you fully understand the detailed rules of the scheme and the associated tax implications.