Government Updates First Home Super Saver Scheme

The First Home Super Saver Scheme (FHSSS) is set to undergo significant changes, providing more flexibility and opportunities for first-home buyers. Initially introduced in the 2017/18 fiscal year, the FHSSS enables individuals to make voluntary contributions to the superannuation system and subsequently withdraw those contributions and associated earnings for use as a deposit when purchasing or constructing their first home.

Under current regulations, individuals have a mere 14-day window to request a release authority once they’ve entered into a home purchase or construction contract. However, recent legislation passed on September 8th has expanded this timeframe, granting FHSSS users a more generous 90-day period to request a release of their savings following a property contract agreement.

The Treasury Laws Amendment (2023 Measures No. 3) Bill 2023, which was part of a broader legislative package passed last week, introduces further improvements to the FHSSS. It now allows applicants to amend or revoke their FHSS Scheme applications before receiving an FHSS Scheme amount, and permits those who have previously withdrawn to re-apply for FHSS Scheme releases in the future.

Moreover, the bill empowers the Commissioner of Taxation to return FHSS Scheme amounts to superannuation funds, provided the amount has not yet been released to the individual. Notably, it clarifies that FHSS Scheme amounts returned by the Commissioner of Taxation to superannuation funds are treated as non-assessable, non-exempt income for the funds and do not count towards individuals’ contribution caps.

These technical modifications apply retrospectively to FHSS Scheme applications made from July 1, 2018.

Assistant Treasurer and Financial Services Minister Stephen Jones MP commented on these changes, noting that the amendments aim to address significant issues within the scheme, making it easier for young Australians to pursue homeownership through the First Home Super Saver Scheme. Minister Jones explained, “The FHSSS, originally introduced by the previous government, suffered from administrative shortcomings, including the inability to rectify application mistakes and rigid timeframes.” He continued, “Under the former government’s scheme, Australians were promised support to buy a home but were left stranded and disappointed, affecting around 4,000 Australians. These changes will also benefit eligible individuals who applied from July 1, 2018, enabling those who engaged in the scheme in good faith to finally access the money they saved for their first home purchase. This illustrates the commitment of the Albanese Government to delivering meaningful outcomes for all Australians.”