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%.
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.