By Philippa Billings, Chief Advice Officer, Otivo
Super has one rule almost everyone knows: you can't touch it until you retire. There's a narrow, deliberate exception, and it exists specifically for people trying to buy a first home. Under the First Home Super Saver Scheme, voluntary contributions made into super can later be released to help fund a deposit — up to $50,000 across a lifetime, plus deemed earnings. The appeal is that money routed through super is generally taxed at 15% on the way in rather than at the contributor's marginal rate, which for someone on $95,000 is 32% including the Medicare levy. The catch is a set of deadlines that are unforgiving if missed. Here's how the scheme works.
The First Home Super Saver Scheme lets eligible first home buyers make voluntary super contributions and later release them towards a home deposit. The ATO limits eligible contributions to $15,000 in any single financial year and $50,000 in total, plus associated earnings. Salary sacrifice, personal deductible contributions and after-tax personal contributions all qualify; employer super guarantee does not.
How does the First Home Super Saver Scheme work?
The scheme has three stages, and they happen years apart.
- Contribute. Voluntary contributions go into super on top of employer super guarantee. These can be concessional — salary sacrifice or personal contributions for which a deduction is claimed — or non-concessional after-tax contributions.
- Request a determination. When the time comes to buy, the ATO is asked for an FHSS determination, which states the maximum releasable amount. This needs to happen before signing a contract to buy or build.
- Release and buy. After the release is approved, the fund releases the money to the ATO, which pays it out after withholding tax. From release, there are 12 months to sign a contract to purchase or construct, with a possible extension.
Only voluntary contributions count. Employer super guarantee, spouse contributions, government co-contributions and downsizer contributions are all excluded, which surprises people who assume their whole balance is in play.
Why does routing a deposit through super save tax?
Because of where the money is taxed.
Take a 29-year-old on $95,000 who wants to put $15,000 towards a deposit this financial year. Saving it from after-tax pay means the money has already been taxed at 32%, including the 2% Medicare levy.
Salary sacrificing the same $15,000 into super means it's taxed at 15% inside the fund instead. On release, the concessional portion is included in assessable income and taxed at the individual's marginal rate less a 30% tax offset — so for someone on a 32% marginal rate, the tax on release is small.
Two things about that worked example matter. First, the amount released for concessional contributions is 85% of the eligible contributions — the 15% contributions tax stays behind — plus associated earnings, which the ATO calculates at a deemed rate rather than the fund's actual return. Second, the tax outcome depends entirely on the individual's marginal rate at both ends, and someone whose income falls between contributing and releasing lands differently from someone whose income rises.
How does the scheme interact with the contributions cap?
This is where people run into a ceiling they weren't expecting.
Concessional FHSS contributions count towards the general concessional contributions cap, which is $32,500 for 2026–27. That cap is a single combined limit covering employer super guarantee, salary sacrifice and personal deductible contributions together — not three separate allowances. Members eligible for carry-forward may have a higher effective cap in a given year.
For the 29-year-old on $95,000, employer SG at 12% is $11,400, leaving $21,100 of the cap. A $15,000 salary sacrifice fits inside that. For someone on $180,000, SG is $21,600, leaving $10,900 — less than the $15,000 annual FHSS limit, so the cap binds first.
One disclosure belongs with any discussion of the tax efficiency here. Where combined income and concessional contributions exceed $250,000 in a financial year, an additional 15% tax applies to concessional contributions above that threshold, bringing the total to 30% rather than 15%. This is Division 293, and income for the threshold includes taxable income, reportable fringe benefits, net investment losses and the concessional contributions themselves. At 30% those contributions remain concessional for someone on the top marginal rate, but the FHSS arithmetic narrows considerably.
And where a deduction will be claimed for a personal contribution rather than using salary sacrifice, a valid notice of intent must reach the fund before the earlier of the day the tax return for that year is lodged, or the end of the financial year after the contribution year — with the fund acknowledging it before the deduction can be claimed.
The four deadlines that decide whether it works
The tax treatment gets all the attention. The deadlines are what actually determine outcomes.
- $15,000 in any single financial year. Contribute more and the excess simply doesn't count as FHSS-eligible, though it still counts towards the contributions caps. Someone who salary sacrifices $25,000 in one year can only count $15,000 of it.
- $50,000 in total. The lifetime limit on eligible contributions across all years.
- Determination and release before signing a contract. Requesting the determination after signing is too late.
- 12 months from release to sign a contract. If no contract is signed within that window and no extension applies, the amount either needs to be recontributed to super, with the ATO notified, or additional tax applies to the released amount.
The first deadline creates a planning consequence worth naming: reaching the $50,000 lifetime limit takes a minimum of four financial years, because of the $15,000 annual ceiling. Someone planning to buy in eighteen months can realistically use the scheme for a fraction of the total.
What are the drawbacks?
Three, and they're substantive.
The money is in super until it isn't. If circumstances change and the home purchase doesn't happen, the contributions stay preserved under the normal super rules, potentially for decades. It's not a savings account with a bonus attached.
Eligibility is a threshold test. The scheme is generally for people who have never owned property in Australia, though the ATO can allow access where financial hardship applies. Someone who has previously owned an investment property is typically excluded.
Deemed earnings, not actual returns. The earnings released are calculated at a rate set by the ATO rather than what the money actually earned in the fund, which cuts both ways depending on how markets performed.
Options often include using the scheme for part of a deposit and saving the rest outside super, and some people choose not to use it at all where a purchase is close and the deadlines don't fit. Whether it makes sense for a particular household depends on income, timeline, existing contributions and how certain the purchase is.
Frequently asked questions
How much can you take out of super for a first home?
Up to $50,000 of eligible voluntary contributions across a lifetime, plus associated earnings, with a limit of $15,000 counted in any single financial year. For concessional contributions, 85% of the eligible amount is released. See the ATO's guidance on FHSS release amounts for detail.
Does my employer's super count towards the First Home Super Saver Scheme?
No. Only voluntary contributions qualify. Employer super guarantee, spouse contributions, government co-contributions and downsizer contributions are all excluded.
Can a couple both use the scheme?
Yes, where both individuals are eligible in their own right. The limits apply per person, so two eligible first home buyers can release up to $50,000 each plus earnings towards the same purchase.
What happens if I don't buy a home after releasing the money?
There are 12 months from release to sign a contract to purchase or build, with a possible extension. If that doesn't happen, the released amount either needs to be recontributed to super with the ATO notified, or additional tax applies.
Is the released money taxed?
The concessional portion and associated earnings are included in assessable income and taxed at the individual's marginal rate less a 30% tax offset. Non-concessional contributions released are not taxed again, having been made from money already taxed.
The scheme rewards people who start early and plan around the deadlines, and penalises people who discover it three months before an auction. Otivo provides regulated digital financial advice under AFSL and Australian Credit Licence No. 485665, and its salary sacrifice advice considers employer contributions, contribution limits, age, income and household expenses when looking at whether a contribution strategy fits. If the general mechanics of salary sacrifice are the missing piece, there's a separate explainer on how salary sacrifice works, and a companion article on what you need in place before applying for a home loan.
Sources
- Australian Taxation Office, First home super saver scheme
- Australian Taxation Office, About FHSS release amounts
- Australian Taxation Office, Concessional contributions cap, 2026–27
- Australian Taxation Office, Division 293 tax
- Australian Taxation Office, Individual income tax rates, 2026–27
Disclaimer
The information in this communication is current as at August 2026 and has been prepared by Otivo Pty Ltd ABN 47 602 457 732, AFSL and Australian Credit Licence No. 485665. This content is general information only and has been prepared without taking into account your objectives, financial situation or needs. It is not personal financial or taxation advice and should not be relied on as such. Before acting on any information, you should consider its appropriateness having regard to your personal circumstances. This material must not be reproduced in whole or in part, or posted on any social media platform, without the prior written consent of Otivo Pty Ltd.