First Home Super Savers (FHSS) Scheme

4 Jun 2025

For many families, helping younger family members buy their first home is a key goal—and increasingly, a financial necessity. With house prices rising and cost-of-living pressures mounting, many parents and grandparents are exploring ways to support the next generation’s entry into the property market.

The First Home Super Saver (FHSS) Scheme offers a smart, long-term strategy to enable younger individuals to save for a deposit in a tax-effective environment, helping them build their savings faster and more efficiently.

What Is the First Home Super Saver Scheme?

The FHSS Scheme allows eligible future first home buyers to make voluntary contributions of up to $15,000 per annum to their super fund, either before-tax (concessional) or after-tax (non-concessional), and later withdraw up to $50,000 (or $100,000 for couples) plus associated earnings to purchase a first home.

The appeal? Super is a tax-advantaged environment, and for younger family members, using the FHSS scheme can grow savings faster than a regular bank account, while also putting more money in their pocket today through immediate tax savings.

Why This Matters

Families considering financial assistance for younger members are well positioned to help the next generation save smarter – while also potentially benefiting themselves. Here’s how:

Tax Benefits:
Voluntary concessional (tax-deductible) contributions are taxed at just 15% within the super environment, much lower than the marginal tax rate of 30% (plus Medicare Levy) or more for those earning over $45,000. Because tax on concessional contributions is paid inside super at a lower rate, it reduces personal income tax and increases overall tax savings outside of super.
Stronger Returns:
Earnings on savings through the First Home Super Saver Scheme are typically higher than those in a regular savings account. For example, the ATO’s deemed rate of return applied to FHSS contributions for April to June 2025 was 7.17% per annum—well above most bank savings rates—making it an attractive option for growing a larger deposit.
Structured Saving:
This purpose-built scheme within superannuation promotes disciplined, long-term saving. Because funds are preserved until used for a first home, young adults cannot easily access them for everyday spending, reducing the temptation to withdraw and helping them stay focused on their goal.
Division 296 Tax:

As Travis Schindler referenced in his recent piece on the impending Division 296 superannuation tax, the exact details of the legislation remain uncertain. However, making annual gifts to children or grandchildren to help fund their FHSS contributions could be a strategic way to support their future while potentially reducing the impacts of this tax.

A Practical Example

Let’s say Adam earns $70,000 a year. He contributes the maximum $15,000 as a personal, tax-deductible contribution into his super fund under the FHSS scheme. Instead of being taxed at his marginal tax rate of 30% (plus Medicare Levy), the contribution is taxed at just 15% inside super resulting in a tax saving of around $2,625 in one year, not including any associated earnings within the fund.

When repeated over multiple years, the benefits compound. If done as a couple, the potential tax savings and growth for a deposit are even greater, making it a highly effective long-term strategy.

Important Considerations

Contribution Caps Apply:
Annual concessional ($30,000) and non-concessional ($120,000) contribution caps apply, so planning is essential.
Timing Is Key:
If the purchase is imminent (e.g. within the next year), there may not be enough time to accumulate meaningful savings or benefit from tax advantages. This strategy works best for individuals who are 2–5 years away from buying.
Notice of Intent to Claim a Tax Deduction Form
If children or grandchildren are making personal contributions with the intention of claiming a tax deduction, they must complete a Notice of Intent to Claim form and submit it to their super fund before lodging their tax return. Coordination with an accountant is advised to ensure the tax implications are managed correctly.
Check with Your Super Fund First
It is important to confirm that your super fund accepts contributions under the FHSS scheme and understand how their withdrawal process works.
Funds Are Preserved if Plans Change

If a child or grandchild decides they do not want to proceed with a home purchase, FHSS funds can’t be accessed for other uses. They remain locked in super until a condition of release is met.

Helping to secure your younger family members’ future sooner can make a meaningful difference. If you would like to explore how the FHSS Scheme could work in your family’s circumstances, we recommend speaking with your adviser to understand the strategy in more detail.