FHSS Contribution Strategy — How to Maximise Your First Home Super Saver
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Contents
The First Home Super Saver (FHSS) scheme can save thousands of dollars in tax when saving for a first home deposit — but the strategy only works if you plan contributions carefully. Here’s how to maximise the scheme.
The Core FHSS Numbers to Know
| Feature | Amount |
|---|---|
| Annual contribution limit | $15,000 |
| Lifetime limit per person | $50,000 |
| Minimum years to reach lifetime limit | 4 (at $15,000/year, then $5,000 in year 4) |
| Couples (combined lifetime limit) | $100,000 |
Strategy 1: Start Early and Contribute Every Year
Because there is no carry-forward for unused annual limits, the best approach is to start contributing as early as possible and contribute $15,000 each year. Missing a year means permanently losing that year’s FHSS capacity.
If you plan to buy in 4 years:
- Year 1: $15,000
- Year 2: $15,000
- Year 3: $15,000
- Year 4: $5,000 (reaches $50,000 lifetime cap)
- Request FHSS determination in year 4 or early year 5
If you plan to buy in 3 years:
- Year 1–3: $15,000/year = $45,000 total
- Apply for determination when ready
Strategy 2: Use Salary Sacrifice for Maximum Tax Savings
Salary sacrificing into super for FHSS provides the best tax outcome for most workers:
| Marginal tax rate | Tax on salary sacrifice (super) | Tax saving vs cash saving |
|---|---|---|
| 19% | 15% | ~4% |
| 32.5% | 15% | ~17.5% |
| 37% | 15% | ~22% |
| 45% | 15% | ~30% |
For a worker on $90,000 (32.5% marginal rate) contributing $15,000 per year:
- Tax paid on super contribution: $2,250
- Tax that would have been paid on income: $4,875
- Tax saving per year: ~$2,625
- Over 3 years: $7,875 in tax savings
On withdrawal, FHSS amounts are taxed at marginal rate less a 30% tax offset, preserving most of this advantage.
Strategy 3: Personal Deductible Contributions for Self-Employed or Salary Sacrifice Not Available
If your employer doesn’t offer salary sacrifice, you can:
- Make personal after-tax contributions to your fund
- Lodge a Notice of Intent to Claim a Deduction with your fund
- The contribution becomes concessional and achieves the same tax outcome as salary sacrifice
This is particularly useful for self-employed individuals, contractors, or casual workers.
Strategy 4: Coordinate With Your Concessional Cap
FHSS voluntary contributions count toward your concessional cap ($30,000 in FY2024–25). Plan around your employer SG contributions to avoid inadvertently exceeding the cap.
Example (salary $100,000):
- Employer SG: 11.5% × $100,000 = $11,500
- Remaining concessional cap: $30,000 − $11,500 = $18,500
- FHSS salary sacrifice: $15,000 (within annual limit)
- Remaining cap for other super: $3,500
Strategy 5: Couples Should Each Contribute
If you are buying with a partner and you both meet FHSS eligibility criteria, each of you can contribute up to $50,000 over your respective FHSS periods — for a combined maximum of $100,000.
This effectively doubles the scheme’s benefit for couples. Each person must apply for their own FHSS determination separately.
Strategy 6: Timing the Determination and Withdrawal
The FHSS process has specific timing requirements:
- Apply for an FHSS determination from the ATO (can do online via myGov)
- The determination confirms how much you can release
- After receiving the determination, sign a contract to buy or build within 14 days
- Then apply for FHSS release — the ATO instructs your fund to release the amount
- The released amount is paid to you, minus withholding tax
You cannot use the FHSS release for a property you’ve already contracted to buy — timing matters.
What to Do If Plans Change
If you don’t end up buying a first home, you can recontribute the released FHSS amount to your super as a non-concessional contribution (within 12 months, or as extended by the ATO). This avoids the “assessed FHSS tax” that applies if you keep the money. If you choose not to recontribute, the FHSS amount is taxed at your marginal rate plus 20%.
Frequently Asked Questions
Should I reduce my emergency fund to maximise FHSS contributions? No — FHSS contributions are locked in super until you release them for a property purchase (or until preservation age if you never buy). Your emergency fund should be maintained separately in an accessible account. FHSS works best when you have adequate cash savings for living expenses and contribute the “excess” savings that you would otherwise lock away for the deposit anyway.
Is it better to use salary sacrifice or personal deductible contributions for FHSS? Both produce the same tax outcome (concessional contributions taxed at 15%, eligible for the 30% offset on withdrawal). The practical difference is timing: salary sacrifice reduces your take-home pay each fortnight; personal deductible contributions can be made as a lump sum before 30 June. If your employer offers salary sacrifice, it’s simpler. If not, or if you are self-employed, personal deductible contributions work identically.
Can I pause FHSS contributions for a year if money is tight? Yes — there is no requirement to contribute in every financial year. However, any year you miss permanently reduces the maximum you can accumulate (since unused annual limits don’t carry forward). If you miss one year at $15,000, you’d need to extend your savings timeline by a full year to reach $50,000. Plan for this rather than assuming you can “make it up later.”
My employer doesn’t offer salary sacrifice. How do I make concessional FHSS contributions? Make personal after-tax contributions to your super fund, then before 30 June lodge a Notice of Intent to Claim a Deduction (available on the ATO website or via myGov) with your fund. This converts the contribution to concessional — the same tax outcome as salary sacrifice. Your fund must acknowledge the notice before you can claim the deduction in your tax return.
Does my partner need to use the same super fund as me for FHSS? No — each person’s FHSS contributions remain in their own super account. Couples can use different funds. Each person applies for their own FHSS determination and release separately. There is no joint FHSS account or application. The $100,000 combined couple limit simply reflects two separate $50,000 individual limits.
What if I’ve been making extra super contributions for years but didn’t know about FHSS — can they count retrospectively? Contributions made on or after 1 July 2017 (when FHSS commenced) can potentially count, provided they were voluntary contributions (not SG) and you haven’t previously applied for FHSS release. Check your contribution history via myGov → ATO → Super → First Home Super Saver. The ATO will determine which historical contributions qualify based on their records. Contributions made before July 2017 are not eligible.
For more: FHSS Annual Limit, FHSS Eligibility, FHSS Tax Treatment, FHSS How to Apply, FHSS FAQ. For advice tailored to your situation, speak with a licensed financial adviser via MoneySmart.