“Super saver” scheme now more flexible for first home buyers

In welcome news for first home buyers, the government has made changes to the operation of the First Home Super Saver Scheme (FHSSS) to improve its flexibility for users.

The FHSSS allows you to withdraw certain voluntary superannuation contributions from your fund (plus associated earnings) to assist with purchasing or constructing your first home. There are detailed rules governing the amounts you can withdraw, but essentially the scheme enables you to withdraw up to $50,000 of eligible voluntary contributions (plus an earnings amount). Eligible voluntary contributions are those made since 1 July 2017, up to $15,000 per year and capped at $50,000. Saving for a home via the FHSSS can have tax benefits, either as part of a salary-sacrifice arrangement or by using personal deductible contributions.

When you want to access these savings to put towards your first home, you must follow a certain process. This firstly involves requesting a determination from the ATO, which will advise you of your maximum FHSSS release amount. Once you receive your determination, you can then request a release of the funds (which is also handled by the ATO), receive the funds, and then notify the ATO when you’ve signed a contract to purchase or construct your home (which must generally occur within 12 months of requesting a release of funds). You can request a release of the funds either before you sign the contract or within a 14-day timeframe after signing the contract. If you don’t comply with the prescribed timeframes, you may be liable for FHSSS tax on the released funds.

However, legislative changes which take effect from 15 September 2024 will improve this process for scheme participants. The changes are designed to address “pain points” that were experienced by first home buyers in the early days of the scheme. 

The changes include:

• Expanding the timeframe for requesting a release: Under the old rules, participants who signed a contract first had 14 days to request a release after signing the contract. From 15 September 2024, this will be expanded to 90 days. (However, you still must have obtained a determination from the ATO before you can make any release request.)
• Expanding eligibility for requesting a determination: Under the old rules, you needed to apply for an initial ATO determination before signing a contract. The amendments now specify that you only need to apply for a determination by completion (ie settlement) of the contract.
• More flexibility to amend applications: The new rules allow more scope to make changes to your participation in the scheme or to correct errors. You’ll also be able to withdraw your application (eg if you change your mind) as long as the ATO has not already begun processing the amount released by your superannuation fund. Withdrawing your release request will not prevent you from making a new request in future.

The changes also provide an opportunity for prior applicants who were unsuccessful to take advantage of the recent amendments by reapplying, even if they now own their home. If you applied to access the FHSSS between 1 July 2018 and 14 September 2024 and were unsuccessful, the ATO will assess your eligibility and, if you’re eligible, contact you to confirm whether you want to request a release.

Source: www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/super/withdrawing-and-using-your-super/early-access-to-super/first-home-super-saver-scheme