How the scheme works
The scheme is an Australian Government program run by the Australian Taxation Office. You pay extra into super, either before tax through salary sacrifice or after tax as personal contributions, on top of what an employer already pays. When you are ready to buy, you apply to have those savings and their associated earnings released.
The tax is the point of it. The ATO says voluntary concessional contributions are taxed at 15% in the fund, which is usually less than your marginal income tax rate, and that the assessable part of a release also earns a 30% FHSS tax offset. Citizenship is not required, and neither is Australian tax residency.
Nothing is ring-fenced. Contributions made for the scheme are not accounted for separately in your super account, you are not required to withdraw them if your plans change, and anything you don’t release stays in super until you meet another condition of release, such as retirement.
What counts as a contribution
Only voluntary contributions made on or after 1 July 2017 can be released under the scheme.
| Kind of contribution | Can it be released? |
|---|---|
| Salary sacrifice, or personal contributions you claim a tax deduction for | Yes, as concessional contributions, which are taxed at 15% in your fund. |
| Personal after-tax contributions you don’t claim a deduction for | Yes, as non-concessional contributions, which are not taxed in your fund. |
| Certain KiwiSaver and other foreign super transfers | Some, on rules the ATO sets out; an eligible KiwiSaver amount is treated as a single after-tax contribution. |
| Super guarantee paid by your employer | No. |
| Contributions made for you by a spouse, parent, friends or family | No. |
| Contributions required under an award, an industrial agreement or a fund’s rules | No; only the part above the required amount is voluntary. |
| Government co-contributions, and anything above the legislated contribution caps | No. |
Defined benefit interests and constitutionally protected funds are excluded too, and rolling those contributions into an accumulation account does not make them eligible.
The limits, and what comes back
As at October 2026 the limits are $15,000 of contributions in any single financial year and $50,000 in total from 1 July 2017. Every voluntary contribution counts towards them in full, whether it is concessional or not.
What comes back is 100% of non-concessional contributions and 85% of concessional ones, plus associated earnings.
The associated earnings are not your fund’s actual returns: the ATO calculates them as a notional amount at the shortfall interest charge rate.
Order matters when a year goes over the limit. Contributions from earlier years are counted before later ones, and within a year they count in the order they were made. If a concessional and a non-concessional contribution arrive at the same time, such as in one payroll run, the non-concessional one is taken first, which the ATO notes gives the larger release.
A worked example
Example, figures invented
A saver salary-sacrifices $8,000 a year for four financial years, and in the fourth year also makes one $5,000 after-tax contribution with no deduction claimed. The fourth year’s total is $13,000, under the $15,000 yearly limit, and the four years together come to $37,000, under the $50,000 total.
- Salary sacrifice counted (4 × $8,000)
- $32,000
- 85% of the salary sacrifice
- $27,200
- After-tax contribution, counted in full
- $5,000
- Contributions that could be released
- $32,200
Associated earnings would be added on top; the ATO works those out, and this example leaves them out. The arithmetic follows the ATO’s 100% and 85% rule. Had any one year’s contributions come to $18,000, only $15,000 of that year would count.
Of that $32,200, the $27,200 from concessional contributions, together with the earnings, is the part the ATO treats as assessable for tax when it is released; the after-tax $5,000 is not. How the release is taxed is on platform 2.
Before the first contribution
The ATO’s conditions for using the scheme are that you are 18 or older when you request a determination, have never owned property in Australia (and that counts land with nothing built on it, an investment or commercial property, a land lease or company title), will have your name on the title of the home you buy, and have not already completed a release. A previous owner may still qualify if the ATO determines they have suffered FHSS financial hardship.
Eligibility is assessed person by person, so a couple, siblings or friends can each use their own contributions towards the same home, and one buyer’s past ownership does not stop another who is eligible.
The ATO lists checks to make before you start:
- read the scheme’s requirements, and consider whether you need financial advice;
- check that your contributions will be eligible;
- check that your super fund will release FHSS amounts, and ask it about fees, charges and any effect on insurance;
- make sure your fund has your current contact details, with your name and address matching the ATO’s records.
You don’t need to tell your fund, your employer or the ATO when you start making FHSS contributions. One knock-on to know about: salary sacrifice contributions are reportable employer super contributions, so they count in your repayment income for study and training support loans such as HELP, and the ATO suggests reviewing your PAYG withholding with your employer.