Frequently Asked Questions

What identification is required to set up an account?
To open a First Home Saver account you will need to:

• Provide a TFN,
• Provide standard proof of identity,
• Complete a declaration that you are eligible.

Where can I set up an account?
The following types of provider can offer First Home Saver accounts:

• Banks
• Credit unions
• Building Societies
• Superannuation funds
• Life Insurance companies

Do I still get the First Home Owners Grant?
The First Home Owners Grant (FHOG) is a separate scheme to First Home Saver accounts, and will continue to be available to individuals who are eligible.

Is there a minimum amount to set up an account?
No, as a general rule you do not need to contribute any money to open an account, though certain account providers may require this.

I’ve already started saving for a home, can I open an account?
Yes you can invest your existing savings in a First Home Saver account. 

Is there a minimum time period that my money is tied up?
First Home Saver accounts are designed to encourage people to develop good savings habits, and a requirement is that contributions of at least $1,000 must be made in each of four or more financial years before an individual can withdraw their funds.

The four year rule would allow you to meet the requirements in less than four full years; e.g. by contributing at least $1,000 by 30 June 2010, 30 June 2011, 30 June 2012, and again on 1 July 2012.

I want to buy a first home within the next 4 years – am I eligible?
The Government proposed changes to First Home Saver Account rules in the 2010 Budget that allow you to purchase a house within the minimum 4 year period. This proposal became law on 25th May 2011, and means for an early home purchase the funds in your FHSA can be paid into your mortgage but only once the minimum qualifying period has elapsed. While funds do not become immediately available to use as a deposit for an 'early purchase', your FHSA balance will not be forced into your super, as was previously the case.

What if I set up an account and don’t make any further contributions?
If you set up an account with an initial contribution and do not make any further contributions you will be unable to withdraw the funds for a home deposit. You must contribute at least $1,000 in each of four or more financial years to release the funds.

Can I set up a joint FHSA account with my partner?
No, an account needs to be set up as an individual account, so each partner must have their own First Home Saver account. But you can make contributions to your partner’s First Home Saver account.

If my partner and I both open separate First Home Saver accounts, can we buy a house together?
Yes, you can use your First Home Saver accounts to buy a joint property, and in this case only one account holder needs to satisfy the four year rule (saving a minimum $1,000 in each of four separate financial years).

I assisted my ex-partner in paying off a mortgage – does this disqualify me from a FHSA?
No, provided you were not listed as an owner of that property, you will be able to open a First Home Saver account.

Personal Contributions

How will I be able to deposit money into my First Home Saver account?
Accounts will generally be set up to accept EFT, Direct Debit, Cheque, BPay, or a deposit over the counter if the provider is a bank.

Can I contribute as much as I like to the account?
There is no annual limit on contributions, but there is a total account balance cap of $85,000 for First Home Saver accounts after which no further contributions can be made. The account balance cap is periodically indexed for inflation in $5,000 increments.

What happens if I make contributions beyond the $85,000 cap?
The additional contributions will be refunded back to the account holder. The account can continue to grow however, through interest earnings or Government contributions that are still due to be paid.

I can’t really afford to contribute much of my salary. Are there any minimums?
You don’t need an initial contribution to open an account, and you can generally contribute as little as you like each year. However before money can be withdrawn from a First Home Saver account there needs to be contributions of at least $1,000 in each of four or more separate financial years, so having a regular savings plan (like a monthly direct debit) can be a good idea.

What happens if I can’t meet the $1,000 minimum contribution one year?
The four year rule for First Home Saver accounts only relates to making minimum contributions in four or more separate financial years, but these don't have to be consecutive years. You could have a break from making contributions, and then re-commence when your circumstances permit.

Can my parents or family put money into the account as a gift, such as birthday, graduation, engagement or wedding?
Yes. Why not strike up a deal with your parents to match whatever you put in?

Can my boss make contributions for me?
Yes, but they must be from post-tax income. Your employer may already have a relationship with your superannuation fund, which could provide your First Home Saver account too.

Government contributions

What is the process for getting the Government contribution?
Individuals do not need to apply for the Government contribution. The ATO administers these payments using information from your First Home Saver account provider and your tax return to determine any government contribution amount owed to you, and pays this directly into your First Home Saver account.

How will the Government keep a record of savings made to First Home Saver accounts to calculate the bonus Government contribution?
Your account provider will make a First Home Saver account activity report to the ATO after the end of the financial year. From this report your tax file number will be used by the ATO to track personal contributions into your account, and to calculate the amount of Government contributions owed to you.

Do I need to lodge my income tax return to get the Government contribution?
Yes. Government contributions are only payable on personal contributions made during a financial year in which you were an Australian resident for tax purposes for at least part of that year. The ATO uses your tax return to determine whether you meet the residency requirements for the relevant year.

When will I receive the Government contribution into my First Home Saver account?
You need to have lodged your income tax return with the ATO for the year in which you made personal contributions (or a notification that you aren't required to lodge a tax return for the year). Your account provider must also lodge a FHSA activity report with the ATO by 31 October, which details personal contributions to your account for the prior financial year. The ATO must pay a government contribution no later than 60 days after receiving both the FHSA activity report and your tax return.

Tax on First Home Saver Accounts

Do I pay tax on my First Home Saver account?
No. The only tax payable on a First Home Saver account is paid directly by your account provider, at a maximum rate of 15 per cent on earnings. Any Government contribution your account receives is tax free. When you withdraw your money to buy a home, it is tax free.

Do I need to declare income from my First Home Saver account on my tax return?
No, you don’t need to declare any income from a First Home Saver account anywhere on your tax return. As part of their reporting obligations, your account provider deals with the ATO on any tax payable from earnings on your account.

Investment of Funds and Fees

What happens if the stock market goes down? Can I lose money?
Different types of account providers (for instance superannuation funds, or banks) will offer different types of First Home Saver accounts. These may have a variety of investment options, which vary from capital guaranteed, to low risk, to higher risk. Generally speaking, higher risk investment options will have better investment performance over the longer term, but you will need to carefully consider which type of account and investment option suits you, given your investment time frame and personal circumstances.

Are there fees on First Home Saver accounts?
Each account provider is able to determine their own fee structure, which they use to recover the costs associated with administering First Home Saver accounts. But any fees and charges associated with a particular First Home Saver account should be made clear to you in a Product Disclosure Document provided to you before you open an account. The Government has said they would like any fees on FHSA's to be low.

Withdrawing

When can I withdraw the funds?
Savings must be accumulated across a minimum of 4 financial years after which you can withdraw the funds to pay for a deposit to purchase or build a first home. Under proposals announced in the 2010 Budget, First Home Saver Account changes allow you to purchase a house within the minimum 4 year period (using other funds), and then after the expiry of the minimum period you can put the funds into your mortgage.

What if I go overseas?
If you move overseas you can continue to contribute to your First Home Saver account but you will not receive any Government contribution. If you depart Australia permanently, you can transfer your money into your superannuation fund, and then it’s subject to the standard release provisions in superannuation.

What if my savings exceed the minimum required deposit for a first home, can I use the difference for other things?
No… the entire balance must be withdrawn at the same time and used for costs associated with buying or building a first home. The account must then be closed.

If I inherit a home to live in or marry someone who already has a home, can I use the savings in my FHSA for other things?
No…if you decide that you will no longer need the savings to buy a first home, the money in your First Home Saver account can be transferred into you superannuation and the account will be closed. It’s important to note that once the account is closed, you will be unable to open another one.

What if I have an accident and can’t work anymore. Can I get access to the money?
You can choose to transfer your money to a superannuation fund where it is then subject to the requirements for early release, which includes possible access for temporary and permanent disablement or severe financial hardship.

Can I use the funds for an investment property?
No… First Home Saver accounts can only be used for buying a first home or building a first home – and the home must be lived in for a continuous period of 6 months.

This page was last updated on 7 June 2011 to reflect increases in the FHSA Account Balance Cap. This page was updated on 9 July 2010 to reflect increases in the Account Balance Cap, Contribution Threshold and Maximum Government Contribution due to First Home Saver account indexation effective 1 July 2010.