Contract Paralegal
Software Developer
Graphic DesignerThe First Home Super Saver Scheme (FHSSS) is a government initiative in Australia aimed at helping first-time homebuyers save for a deposit for their first home through their superannuation fund. This scheme allows individuals to make voluntary contributions to their superannuation fund, which can then be withdrawn later to purchase their first home. In this article, we will explore the details of the FHSSS, including how it works, who is eligible to participate, the benefits of the scheme, and how to make withdrawals.
How Does the FHSSS Work?
The FHSSS allows individuals to make voluntary contributions to their Superannuation Fund, up to a maximum of $15,000 per year and $30,000 in total. These contributions are made on top of the compulsory super contributions that individuals make through their employer. The contributions can be made either through Salary Sacrifice or as personal contributions for which a tax deduction can be claimed.
Eligibility Criteria
In order to participate in the FHSSS, individuals must meet certain eligibility criteria. This includes:
- Being at least 18 years old
- Having never owned property in Australia before
- Intending to live in the property purchased as soon as practicable
- Not having previously requested the release of FHSSS funds
Benefits of the FHSSS
There are several benefits to participating in the FHSSS, including:
- Income Tax Savings: Contributions made through the FHSSS are taxed at the concessional rate of 15%, which is lower than the individual’s marginal tax rate.
- Faster Saving: By making additional contributions to their superannuation fund, individuals can save for their first home deposit more quickly.
- No Impact on Super Balance: Withdrawals made under the FHSSS do not affect an individual’s super balance or their ability to contribute to their superannuation fund in the future.
Withdrawal Process
Once eligible individuals have made the necessary contributions to their Superannuation Fund, they can apply to release these funds to purchase their first home. The maximum amount that can be released is $30,000 of voluntary contributions, plus associated earnings. Upon approval, the funds are released to the individual, who has 12 months to sign a contract to purchase or construct their first home.
If the funds are not used within this timeframe, they must be re-contributed to the individual’s Superannuation Fund, or additional tax may apply. It’s important to note that the released funds can only be used for the purpose of purchasing a first home, and there are penalties for non-compliance.
Conclusion
The First Home Super Saver Scheme is a valuable initiative that can help first-time homebuyers achieve their goal of homeownership more quickly. By making additional contributions to their Superannuation Fund, individuals can take advantage of tax benefits and expedite their savings process. If you are a first-time homebuyer in Australia, it’s worth exploring whether the FHSSS is the right option for you.
Technical Writer
Contract Paraplanning