The First Home Super Saver Scheme Explained

29th Jun, 2020 | First Home Buyer

In this article:
Access this quick guide on how to use the First Home Super Saver Scheme to accumulate a loan deposit faster.

Among the many ways to save up for a home deposit, the First Home Super Saver Scheme is another effective method. Here’s a quick guide on how it works.

What is it?

The First Home Super Saver Scheme was introduced in 2017 to help first home buyers save up for a loan deposit. Under this scheme:

  • You can make voluntary contributions of up to $30,000 for a home loan deposit for your first home.
  • The maximum voluntary contribution is $15,000 per financial year.
  • The contributions need to be different from employer contributions.
  • By making pre-tax voluntary salary contributions, your contribution will be taxed at a lower rate (when compared with your regular salary) allowing you to save up for a home loan deposit faster.

Eligibility Criteria

  • You need to be over 18 years of age.
  • You should have never owned property in Australia before.
  • You are a first-time applicant (this means that if you are purchasing a property with a partner who has owned property before, but you are a first home buyer you are still eligible).
  • You need to live in the property for at least six months within the first twelve months of purchase.

Get it right from the start with professional help.

The process to access the scheme

  • Start making voluntary contributions to your super fund.
  • Once you’re ready to make the purchase, apply to ATO (Australian Taxation Office) for the funds to be released using the MyGov app.
  • You could apply for the funds before or after signing the purchase contract as you have 12 months to use the funds.
  • You need to notify ATO within 28 days of purchasing the property.

Situations where the scheme may not be helpful

  • The most significant benefit of the scheme is the tax saving it offers. Pre-tax salary contributions are taxed at a lower rate, so in cases where a person is not paying much tax to begin with, the benefit of the scheme may not be much.
  • There is limited flexibility in terms of use of the savings amount. If an individual decides not to use the funds for property purchase, the funds become inaccessible till retirement.

Things to keep in mind

  • Check on how easily your super fund will release the amount post-ATO approvals.
  • Have a clear idea of the processing fees involved.
  • The maximum benefit derived from the scheme is through pre-tax salary sacrifice. A lot of employers do not have provisions for this. In case you plan on making pre-tax salary contributions check if your employer allows this.
While the scheme is indeed an effective way to save up for a first home loan deposit, it’s best to seek professional advice to understand if it suits your specific circumstances. As mentioned earlier, if you are not going to benefit much in terms of tax savings, you should look at other ways.
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