First-time homebuyers will now have an extended window to request the release of their superannuation savings to build or purchase their first home under the First Home Super Saver Scheme (FHSSS) after legislation successfully passed through parliament recently.
The Treasury Laws Amendment (2023 Measures No 3) Bill 2023 passed through the Senate on 6 September after a third reading, having been introduced into the House of Representatives on 14 June.
Assistant Treasurer and Financial Services Minister Stephen Jones said the legislation introduced several amendments to the FHSSS and added these changes will have a retroactive effect, applying to applications made since 1 July 2018.
“This week we passed legislation addressing significant pain points in the scheme. The FHSSS was introduced by the previous government yet was plagued by administrative shortcomings, including an inability to rectify application mistakes and inflexible timeframes,” Jones stated.
“We are giving young Australians more time to access funds to complete their house purchase by extending the timeframe to request a release of savings (after entering into a contract) from 14 days to 90 days.
“The changes will also apply to eligible individuals who applied from 1 July 2018, which will help Australians who engaged in the scheme in good faith finally access the money they saved to purchase their first home.”
Institute of Financial Professionals Australia (IFPA) head of superannuation and financial services Natasha Panagis welcomed the passing of the bill, calling it good news for many younger prospective homeowners who are increasingly turning to the scheme.
“The ATO has shown that they’ve made total payments of $141.7 million in the 2021/22 financial year,” Panagis told attendees at an IFPA webinar last week.
“The last time they released statistics on this scheme was back in the 2019 financial year and just under $39 million was released, so as you can see it has been quite popular.
“This bill will improve flexibility and allow individuals to do two things: it will allow them to amend or revoke their application to the ATO under the scheme and it will [also] give [individuals] some more time [to request a release of funds].”
The bill also introduces provisions enabling the tax commissioner to return FHSSS funds to superannuation accounts if they have not yet been released to the individual.
Crucially, these returned monies will be categorised as non-assessable, non-exempt income for the fund, ensuring they do not affect individuals’ contribution caps.
Additionally, the passage of the legislation permits individuals who have made withdrawals to reapply for the scheme in the future.