About the FHSS scheme
The First Home Super Saver Scheme lets eligible first-home buyers save extra money inside their superannuation fund, taxed at a low 15% rate instead of their full marginal income tax rate, then release that money (plus deemed earnings) for a deposit. For FY 2025-26 the contribution caps are A$15,000 per financial year and A$50,000 in total across all years. A 30 percentage point offset on the withdrawal tax means most savers get the bulk of the contributions-tax saving net of release tax. Contributions count toward your A$30,000 concessional cap if salary-sacrificed or claimed as a personal tax deduction.
How the math works
- Each year, your eligible concessional contribution arrives in super and is taxed 15%. So A$15,000 gross becomes A$12,750 net into the fund.
- The fund balance compounds at the ATO's deemed rate (Shortfall Interest Charge + 3%, typically ~7-8% p.a., currently used as 7.5% by default).
- On release, the ATO calculates "associated earnings" - effectively the deemed compounded growth on your contributions over the period.
- The release amount = eligible contributions (capped at A$50,000 lifetime) + associated earnings.
- Withdrawal tax = release × (marginal rate − 30 pp). If marginal is below 30% the offset still applies but cannot push the rate below 0%.
- The comparison line shows what the same gross dollars would grow to if kept outside super in a post-tax savings account at the chosen HISA rate.
Year-by-year FHSS balance
| Year | Gross contribution | Net into super | Earnings | End-of-year balance |
|---|
Balance growth uses the deemed-earnings rate. The ATO uses a daily proxy in practice; annual compounding matches the official calculator within rounding.
Sensitivity: marginal-rate scenarios
How much net release and post-tax advantage at each Australian marginal-rate band, holding all other inputs constant:
| Marginal rate | Gross release | Withdrawal tax | Net release | Advantage vs HISA |
|---|
Worked example: A$15,000 a year for 3 years at 30% marginal rate
This is the default scenario shown above. The numbers help build intuition for the scheme.
- Gross contributions across 3 years: A$45,000 - all of which counts toward the lifetime A$50,000 cap.
- Tax saved during contribution: at 30% marginal rate vs 15% in super, the saving is A$45,000 × (0.30 − 0.15) = A$6,750 in personal income tax across the 3 years.
- Net into super: A$45,000 × 0.85 = A$38,250 across the 3 years.
- Associated earnings: at the 7.5% default deemed rate, end balance approximately A$41,200, so earnings ~A$3,000.
- Gross release: contributions (A$45,000) + earnings (~A$3,000) = ~A$48,000.
- Withdrawal tax: at 30% marginal − 30% offset = 0%, you pay no withdrawal tax in this case.
- Comparison: the same A$45,000 gross, taxed at 30% before saving, would be A$31,500 in a HISA growing at 4.5% post-tax - reaching only ~A$33,800 after 3 years.
- Net advantage: approximately A$14,000 extra deposit, a 40%+ uplift on what the same gross dollars would have funded outside super.
Eligibility checklist before you contribute
| Requirement | Detail |
|---|---|
| Age | At least 18 to request release. Contributions can be made earlier. |
| First home test | Never owned property in Australia (residential, investment, vacant land, commercial, company title). |
| Per-fund release | Have not previously requested an FHSS release. |
| Intent to live | Will live in the property as your home for at least 6 of the first 12 months you can practically occupy it. |
| Determination | Request an FHSS Determination BEFORE signing the contract. 14 days from contract to release request. |
| Caps | A$15,000 per FY, A$50,000 lifetime in contributions. Earnings on top are not capped. |
FHSS vs simply saving in a high-interest savings account
Two effects drive the FHSS advantage:
- Tax wedge on contributions. If your marginal rate is 30%, every A$1 of pre-tax salary that goes into super arrives as A$0.85. Every A$1 that goes into a HISA arrives as A$0.70. That is a 21% larger principal for the FHSS path before any growth.
- Concessional growth. Inside super, earnings on your contributions are taxed at 15% (or the deemed rate for FHSS purposes); outside super, earnings are taxed at your marginal rate. Even at 4-5% returns the difference compounds noticeably over multi-year deposit-saving horizons.
The 30 percentage point release-tax offset on the way out cleans up most of the contribution tax owing, so the bulk of that wedge is permanent rather than just deferred.
Common mistakes that erase the benefit
- Signing first, requesting Determination after. Signing a contract before the ATO issues an FHSS Determination disqualifies you from release. Always Determination first.
- Asking your fund for a release directly. The release request must go to the ATO, not the super fund. The ATO then issues a release authority to your fund.
- Exceeding the per-year cap. Only A$15,000 of contributions in any single FY are FHSS-eligible. Extra concessional contributions still count toward your A$30,000 concessional cap but cannot be released under FHSS.
- Counting employer SG as FHSS. SG is not eligible. Only voluntary salary-sacrifice and personal deductible (concessional) or personal post-tax (non-concessional) contributions count.
- Buying a houseboat. Not joking. Houseboats, motor homes and non-fixed dwellings do not qualify.
FHSS at a glance vs other Australian first-home schemes
| Scheme | Type | Key benefit | Combine with FHSS? |
|---|---|---|---|
| FHSS | Save inside super | Lower tax on contributions and earnings; release up to A$50K + earnings. | - |
| First Home Guarantee | Govt-backed loan guarantee | Buy with 5% deposit, no LMI. | Yes |
| Regional First Home Guarantee | Govt-backed loan guarantee (regional) | 5% deposit, regional area only. | Yes |
| Family Home Guarantee | Govt-backed loan guarantee (single parent) | 2% deposit, no LMI. | Yes |
| State First Home Owner Grant | State cash grant | A$10,000-A$30,000 cash, varies by state, usually for new builds. | Yes |
The formula explained
This calculator applies four chained formulas:
1. Net contribution = gross × (1 − 0.15)
2. Balance(y) = (Balance(y-1) + net contribution) × (1 + deemed rate)
3. Withdrawal tax = release × max(0, marginal rate − 0.30)
4. HISA comparison = sum of (gross × (1 − marginal)) compounded at HISA rate
These rules come from the Treasury Laws Amendment (First Home Super Saver) Act 2017 and current ATO administrative practice. The 30 percentage point offset on the way out is designed to leave you roughly with the contribution-tax saving (15 pp) plus any growth taxed at the concessional rate, while normalising the release as ordinary income subject to your usual scale.
To verify, plug in (15000, 1, 30, 30000, 7.5, 4.5): the result should match the ATO's example calculator within a few dollars of annual vs daily compounding rounding.
Frequently asked questions
How much can I withdraw under the FHSS scheme?
You can withdraw up to A$15,000 of eligible voluntary contributions made in any single financial year, with a lifetime total of A$50,000 in contributions, plus associated deemed earnings on those contributions. Compulsory employer Superannuation Guarantee contributions are not eligible. The A$15,000 yearly cap is independent of the A$30,000 concessional cap, but counts toward it.
Do I need to be a first home buyer to use FHSS?
Yes - you must never have owned property in Australia, including investment property, vacant land, commercial property or company-title interest. You must be at least 18 to request a release (though you can contribute earlier). If you have previously owned property the Commissioner can apply a financial-hardship determination in limited circumstances.
What properties qualify for FHSS release?
Residential property in Australia (including vacant land if you build on it). You must intend to live in it as your principal place of residence for at least 6 of the first 12 months you can practically move in. Houseboats, motor homes and similar non-fixed dwellings do not qualify, and pure investment properties do not qualify.
Can my spouse and I both use FHSS on the same property?
Yes - FHSS caps are per person. A couple can each save up to A$50,000 of contributions (A$100,000 combined) plus associated earnings, even when buying the same home together. Each person must individually meet the first-home and residency tests, and each must request their own FHSS Determination.
Concessional vs non-concessional - which contributions qualify?
Both qualify. Concessional contributions (salary sacrifice or personal deductible) release at 85% (after the 15% contributions tax in the fund) and the released amount is assessable income subject to the 30 pp tax offset. Non-concessional contributions (post-tax personal contributions) release at 100% and are tax-free on withdrawal. Most savers use concessional for the upfront marginal-rate saving.
What is the FHSS Determination and the 14-day deadline?
You must request an FHSS Determination from the ATO BEFORE signing any contract to buy or build a home. The Determination confirms your maximum releasable amount. Once you sign a contract you have 14 days to submit a release request. After release you have 12 months (extendable on request to 24 months) to sign a home purchase contract.
Can I combine FHSS with the Home Guarantee Scheme?
Yes. The FHSS released amount sits in your bank account as part of your deposit. You can layer the First Home Guarantee, Regional First Home Guarantee or Family Home Guarantee on top, subject to each scheme's separate price caps, income caps and eligibility criteria. Many first-home buyers stack FHSS + Home Guarantee to lower both their deposit barrier and Lenders Mortgage Insurance.
What if I withdraw FHSS funds but never buy a home?
You have 12 months from release to sign a home purchase contract (extendable to 24 months on request). If you do not, two options apply. Either recontribute the assessable amount back into super as non-concessional within the deadline, or pay FHSS misuse tax at a flat 20% on the assessable released amount in addition to any earlier release tax already paid.