Taxed at Your Rate With a 30% Offset, Withheld on the Way Out
A First Home Super Saver release is not tax-free. The concessional contributions and the associated earnings are included in your assessable income, reduced by a 30% tax offset, and the ATO withholds an estimate before paying the balance to you. Non-concessional amounts released are not taxed. The result is that the money arriving is less than the amount released.
- The answer: Released concessional contributions and associated earnings are assessable with a 30% offset; released non-concessional amounts are not taxed.
- The trap: Withholding is applied at an estimated rate before payment, so the amount that reaches your account is less than the release amount and the difference is settled at tax time.
- The recommendation: Request the determination before you make an offer. The release takes time and the amount you actually receive is not the amount you contributed.
Where the AI summary above gets this wrong
"The First Home Super Saver Scheme lets you withdraw your extra super contributions tax-free for a home deposit."
That's surface-true. Here's what it misses:
- The concessional part is taxed — Released concessional contributions and their associated earnings are assessable income, reduced by a 30% offset. Only released non-concessional amounts come out untaxed.
- Withholding reduces what arrives — The ATO withholds an estimate before paying the release, so the deposit available is less than the release amount until the return is lodged.
01 What can be released
Voluntary contributions made into super — concessional or non-concessional — can be released under the scheme, up to annual and total limits, along with associated earnings calculated at a deemed rate rather than the fund's actual return.
Compulsory Superannuation Guarantee contributions cannot be released, and neither can amounts contributed before the scheme started. The scheme is about voluntary saving through super, not about accessing the balance.
The eligibility conditions, the limits and the timing are in the FHSS guide. This post is about what happens to the money on the way out.
02 How it is taxed
The concessional contributions released, plus the associated earnings on the whole released amount, are included in your assessable income for the year of the release. A 30% tax offset is then applied to that amount.
For someone on a marginal rate below 30% the offset can exceed the tax, and for someone above it there is a residual liability. Non-concessional amounts released are not assessable at all, because tax was already paid on them.
The ATO withholds an estimate at the time of release. That is why the amount arriving in your account is less than the release amount, and the difference is reconciled when the return is lodged.
Shows: the net amount from a First Home Super Saver release after the concessional portion is assessed at your marginal rate with the 30% offset. Ignores: the Medicare levy, the withholding estimate applied at release, and the annual and total release limits.
03 The timing that matters
You must request a determination from the ATO before signing a contract to buy or build. Requesting it afterwards is too late, and the release is then unavailable for that purchase.
The release itself takes time — the ATO issues the determination, you request the release, and funds are then transferred. That sequence should be started well before a deposit is needed.
Once released, the money must be used to buy or build within the specified period, or you notify the ATO and either extend, recontribute, or pay an additional tax on the amount.
A release can only be made once. Someone who releases for a purchase that falls through and recontributes the amount cannot use the scheme again for a later purchase, which makes the decision to request the release worth being confident about.
The determination has to come before the contract, and that is the detail that ends the most FHSS plans. People find the house, sign, and then discover the release they were counting on is unavailable for that purchase. Start the paperwork before you start looking.
FAQ
How is the First Home Super Saver Scheme release amount taxed when I withdraw it?
Released concessional contributions and the associated earnings are assessable income with a 30% tax offset. Released non-concessional amounts are not taxed, and the ATO withholds an estimate before paying the balance.
How much can I withdraw under the First Home Super Saver Scheme?
Voluntary contributions up to annual and total limits, plus associated earnings calculated at a deemed rate. Compulsory Superannuation Guarantee contributions cannot be released.
When do I have to request the determination?
Before signing a contract to buy or build. Requesting it afterwards is too late for that purchase, and the release process itself takes time on top of that.
Sources
Regulator references
- ATO — First Home Super Saver scheme · Australian Taxation Office · 2026The First Home Super Saver scheme: what can be contributed and later released for a deposit.Last verified: 2026-09-07
- ATO — Tax rates: Australian resident · Australian Taxation Office · 2026The resident marginal rate scale by income year, excluding the Medicare levy.Last verified: 2026-09-07
Calculator unit tests · the assertions this page's worked example is checked against, and their last result
Changelog
- 2026-09-07 — initial publish (new format)
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Jordan Reeves
Founder of Talk Through Wealth. A software engineer for over a decade before turning to retirement planning, Jordan built the projection engine after watching family members get fragmented, country-by-country advice that never reconciled. He writes about retirement the way the engine computes it: month-by-month, lifetime-long, and skeptical of any rule of thumb that hasn't been run through the math.