If you’re eligible, you can use the scheme to save money in your super fund for a home deposit.
The scheme was introduced on 1 July 2017 and you may have been able to start making contributions into your super account from that date. From 1 July 2018, you will be able to apply for the release of those contributions and the earnings they have made to put towards purchasing your first home.
How do I qualify?
To access the scheme, you need to meet six criteria. These are:
- You are over 18.
- You have not previously owned any property in Australia (or you are determined to have suffered financial hardship by the Commissioner of Taxation).
- You have not previously released funds under the scheme.
- You intend to live in the purchased premises as soon as possible.
- You intend to live in the purchased property for at least 6 out of the first 12 months of ownership, after you are able to move in.
- You are not using the scheme to buy any premises that can’t be used as a residence, is a houseboat, a motor home or vacant land.
Your eligibility to access the scheme will be assessed on an individual basis. Because of this, you and your partner, sibling or friend can each apply for the scheme and pool your money to purchase a single property. You can even use your scheme earnings to buy a house with someone who is ineligible to use the scheme, as long as you individually are eligible.
How do I contribute?
If you are eligible, you can start making concessional and non-concessional contributions to the super fund of your choice. However, make sure that your chosen fund will be able to release the money, as some funds, like defined benefit interests, or constitutionally protected funds are not able to. You should also enquire about any fees or charges associated with releasing funds under the scheme.
The maximum you can contribute towards the scheme is $15,000 in a single year. Any contributions you make will count against the normal contributions cap for both concessional and non-concessional contributions. Make sure you know how much you are contributing and what type of contribution you are making. Any super guarantee amounts paid by your employer are ineligible to be used for the scheme. There is also a maximum total amount that you can save under the scheme; you can save a total of $30,000 to put towards your home.
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How do I access my savings?
When you want to withdraw the money you have saved, you need to apply to the Commissioner of Taxation to make a determination on your savings and the amount they have earned. You will be able to do this via a form on the Australian Taxation Office website, although the form has not been released at the time of writing.
You may be able to withdraw from your super fund 100% of eligible non-concessional contributions, 85% of concessional contributions and any earnings. The earning on your contributions will not be based on the actual investment performance but will be determined by the ATO. The earnings will be based on the rate of 90-day bank bills plus 3%. For example, at the launch of the scheme, the annual return would have been 4.78%, but due to market volatility, the exact rate of return is likely to change over time.
Once your funds have been released, you need to make sure you use the money to buy a home within 12 months. Failure to do so, and to notify the Tax Office, will result in a tax of 20% of your scheme savings, unless you apply for an extension of a further 12 months or recontribute the funds into your super. You will also need to include the released scheme savings in your income tax return for the applicable year.
If you’re thinking about using the first home super saver scheme to buy a home, you should also look at the Canstar star rating for home loans and super funds. You can also read more about home loans and superannuation. To learn more about first home super savers scheme visit the ATO website.
Compare superannuation with Canstar
The following table contains details of the superannuation funds rated by Canstar based on someone aged 40-49. This table has been sorted by one-year performance (highest to lowest).
Please note that the performance information shown in the table is for the investment option used by Canstar in rating of the superannuation product.