This article provides general information only and does not constitute personal financial advice. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on any information in this article, you should consider whether it is appropriate for you and seek advice from a licensed financial adviser if necessary.

Saving a deposit for your first home while watching compulsory super contributions disappear into a locked fund can feel like running two savings goals in parallel. The First Home Super Saver Scheme (FHSS) solves this problem by letting you redirect voluntary super contributions toward your deposit, with tax advantages that make each dollar work harder than it would in a standard savings account.

How the scheme works

The FHSS allows eligible first home buyers to make voluntary contributions to their super fund and later withdraw those contributions, plus associated earnings, to put toward a property deposit. According to the Australian Taxation Office, you can contribute up to $15,000 per financial year, with a lifetime cap of $50,000 across all years (ATO, 2026). Both concessional (before-tax) and non-concessional (after-tax) voluntary contributions count, though concessional contributions deliver the strongest tax benefit.

The scheme is administered through your super fund and the ATO. You make voluntary contributions as you normally would (via salary sacrifice for concessional contributions, or personal after-tax contributions you claim a deduction for), then apply to the ATO to release the funds when you are ready to buy. You must be 18 or older, have never owned property in Australia, and intend to live in the purchased property for at least six months of the first 12 months after it becomes practicable to move in.

What you can withdraw

When you apply for an FHSS release, the ATO calculates your eligible amount using your contributions plus deemed earnings. Deemed earnings are not your fund’s actual investment returns but a standardised rate set by the ATO, based on the 90-day bank bill rate plus three percentage points. This smooths volatility and simplifies the calculation across different super funds.

For example, if you contributed $15,000 per year for three years (total $45,000 in concessional contributions), the deemed earnings might add another $4,000 to $5,000 depending on the rates that applied in each year, bringing your total eligible release to around $49,000 to $50,000. The exact deemed earnings figure depends on when you made each contribution and the prevailing deemed rate at the time, as explained in foundational finance texts such as Principles of Finance, which covers time value of money concepts relevant to contribution growth.

Tax treatment and benefits

The tax advantage comes in two stages. First, concessional contributions are taxed at 15 per cent inside your super fund (the contributions tax), which is lower than most people’s marginal tax rate. If your marginal rate is 32.5 per cent or higher, you immediately save 17.5 percentage points or more compared to saving in a taxed account.

Second, when the FHSS amount is released to you, it is included in your assessable income but you receive a tax offset. The offset is calculated as 30 per cent of your assessable FHSS released amount (excluding any non-concessional contributions, which are already after-tax). Your effective tax rate on the withdrawn concessional contributions is therefore your marginal rate minus 30 per cent. For someone on the 32.5 per cent bracket, this means a net 2.5 per cent tax on withdrawal, far below the rate they would have paid on interest from a standard savings account.

Non-concessional contributions are not taxed again on withdrawal because you have already paid tax on that income.

Read also: First Home Super Saver Scheme: Withdrawing Your Savings to Buy in Australia in 2027

Worked example

Sarah earns $85,000 per year (marginal tax rate 32.5 per cent) and arranges salary sacrifice of $15,000 per year into her super fund as concessional contributions. Over three financial years she contributes $45,000. Her super fund deducts 15 per cent contributions tax ($6,750 total), leaving $38,250 in her account attributable to FHSS.

When Sarah applies for an FHSS release after three years, the ATO calculates deemed earnings of approximately $4,200 (the exact figure depends on quarterly deemed rates). Her total FHSS release amount is $45,000 (gross contributions) plus $4,200 (deemed earnings), totalling $49,200.

The $49,200 is added to her assessable income in the year of release. She receives a tax offset of 30 per cent of $49,200, which equals $14,760. Her actual tax liability on the release is her marginal rate (32.5 per cent) applied to $49,200 ($16,005) minus the $14,760 offset, for a net tax of $1,245. Her effective tax rate on the release is 2.5 per cent.

Sarah nets $47,955 after tax to put toward her deposit, compared to the original $45,000 in contributions. The deemed earnings and low effective tax rate mean she has come out ahead compared to saving the same $45,000 in a high-interest savings account taxed at her full marginal rate.

Eligibility and timing

You can only access the FHSS once. If you withdraw funds under the scheme but do not proceed with a purchase within 12 months (or 24 months if you apply for an extension), you must either complete the purchase, recontribute the released amount to super, or pay FHSS tax on the released amount.

Contributions made under the scheme can be made over multiple years. There is no minimum time you must wait, but spreading contributions across financial years allows you to maximise the $15,000 annual cap. As of October 2026, verify current contribution caps and deemed earnings rates at ato.gov.au, as these settings are subject to change.

The FHSS is one of the few ways to access super before retirement, and for first home buyers it converts a long-term savings vehicle into a near-term deposit strategy with a built-in tax advantage. Whether it makes sense for your situation depends on your income, your timeline, and how much you can afford to salary sacrifice without affecting your take-home pay.