Written by Jeannel Lasquites - Paraplanner
Today, home ownership is harder for young people to attain than ever—rising house prices, inflation, student debt, and cost-of-living pressures have made it extremely difficult for young Australians to break into the property market.
Many young adults in their 20s and 30s are trying to save for a deposit while paying high rent, often struggling to build momentum. As a grandparent, you may be in a position to offer financial guidance or assistance to the young people in your life to help them get on the property ladder.
One of the most tax-effective ways for your grandchild to accumulate a deposit is through the First Home Super Saver Scheme (FHSSS). This article considers what gifting options grandparents have to aid their young adults in making FHSSS-eligible contributions.
What is the First Home Super Saver Scheme?
The FHSS scheme allows eligible individuals to voluntarily contribute to their superannuation fund and later withdraw those contributions—plus associated earnings—for use as a first home deposit.
Key Features:
- Contribution types: Voluntary concessional (before-tax) or non-concessional (after-tax)
- Annual cap: Max $15,000 in eligible contributions per financial year
- Total cap: Up to $50,000 of eligible contributions can be released
- Eligibility: Must be a first home buyer, aged 18+, and never owned residential property in Australia
- Tax treatment: Released concessional contributions are taxed at a marginal rate minus 30% offset
Gifting Toward a Super Contribution: What Grandparents Need to Know
While it’s tempting to transfer money directly into your child or grandchild’s super account, doing so has adverse tax consequences for them. Any amount you contribute directly is counted against their concessional contributions cap and subject to 15% contributions tax. It’s not tax effective either, as neither you nor your grandchild can claim a tax deduction for that contribution.
Instead, a better approach may be to gift the money to them so they can contribute it to their super personally.
Funds contributed from after-tax money are initially counted as a non-concessional contribution which is not subject to contributions tax; however, if your Grandchild has sufficient taxable income to offset with a deduction, they could lodge a Notice of Intent to Claim a Tax Deduction which transforms the contribution into a concessional contribution.
Another straightforward and tax-effective strategy may be for your grandchild to set up a salary sacrifice agreement with their employer, whereby contributions go into super pre-tax and are automatically classified as concessional. This reduces their take-home income; therefore, you may then gift them funds to assist in meeting their living expenses.
Making concessional contributions is a particularly powerful strategy because it reduces the individual's taxable income and increases the funds accumulating within super. Modelling from Treasury suggests that concessional contributions are often more effective under the FHSS scheme, due to these tax advantages.
This strategy places control with your grandchild, so it is important that they are fully informed and committed. It’s important to understand that once gifted, the money belongs to them to do with as they wish. You should clearly communicate your intention and have confidence that they will use the gift as agreed.
Example in Action: Meet Olivia
Your granddaughter Olivia is 28 years old, employed full-time, and plans to buy her first home within the next three to five years.
You decide to support her with a total gift of $30,000 staggered over three financial years. This approach ensures you remain within Centrelink’s gifting rules, which allow up to $10,000 per financial year and no more than $30,000 over a rolling five-year period without affecting your Age Pension entitlements.
Each year, Olivia contributes the $10,000 into her superannuation fund using one of two allowable methods under the First Home Super Saver scheme (FHSSS):
· Preferred option – Salary sacrifice
Olivia arranges with her employer to salary sacrifice $10,000 of her pre-tax income directly into super. These contributions are classified as employer concessional contributions, taxed at only 15 percent within the fund.
Since salary sacrifice is made from pre-tax income and processed by the employer, no further paperwork is needed, and no Notice of Intent to Claim a Deduction (NOIC) is required. This strategy is seamless and automatically reduces Olivia’s taxable income while building her super savings efficiently.
· Alternative option – Personal deductible contributions
If salary sacrifice isn’t available through her employer, Olivia may instead make a personal contribution to her super fund from her after-tax income. To make this contribution concessional and gain the tax benefit, Olivia must lodge a Notice of Intent to Claim a Deduction (NOIC) with her super fund and receive acknowledgment.
This process reclassifies the contribution as concessional, allowing it to be taxed at 15 percent within the super fund and giving Olivia a personal tax deduction when she lodges her return.
Over the next three years, Olivia contributes a total of $50,000 into her super by making personal contributions using your gifts and salary sacrificing an additional $20,000 from her annual bonuses. These amounts grow with investment earnings inside the super fund.
When Olivia is ready to purchase a home, she logs in to myGov and applies to the ATO for an FHSSS determination, which tells her the exact amount she can access. Once she finds a property and signs a contract, she then submits a formal request to release the funds.
The ATO pays the released amount into her bank account, and Olivia uses it to boost her home deposit.
Your staggered financial support, paired with Olivia’s smart contribution strategy, gives her a powerful and tax-effective head start in entering the property market — while reinforcing good financial habits along the way.
Why This Approach Benefits You Both
Helping your grandchild through the First Home Super Saver scheme (FHSSS) is not just about giving them a financial boost — it’s about leaving a legacy that combines practical assistance with lifelong impact. The beauty of this approach is that it strengthens family ties, imparts valuable financial lessons, and creates opportunities without unnecessary complexity.
The key benefits of gifting for the purpose of your young adult making contributions under the First Home Super Saver Scheme include:
1. A simple way to transfer wealth to the next generation during your lifetime
2. Increases financial literacy and discipline as a foundation for a healthy financial future
3. Delivers tax-effective savings outcomes to grow a deposit faster
4. Gifting within the Centrelink means testing rules may benefit your own position
5. You experience the power of your legacy working during your lifetime
Taking the Next Step
Helping your grandchild into their first home could become one of the most rewarding and impactful things you ever do for them. It’s not only a generous act of financial support, but an opportunity to guide and educate — shaping their financial habits, boosting their confidence, and showing that your care goes far beyond money.
That, truly, is a gift that goes beyond money. It’s a legacy of trust, wisdom, and love.
If you would like more information on the First Home Super Saver Scheme and how it can help the young people on your life get their foot on the property ladder, reach out to your financial adviser.
The information in this article contains general advice and is provided by Primestock Securities Ltd AFSL 239180. That advice has been prepared without taking your personal objectives, financial situation or needs into account. Before acting on this general advice, you should consider the appropriateness of it having regard to your personal objectives, financial situation and needs. You should obtain and read the Product Disclosure Statement (PDS) before making any decision to acquire any financial product referred to in this article. Please refer to the FSG (www.primefinancial.com.au/fsg) for contact information and information about remuneration and associations with product issuers. This information should not be relied upon as a substitute for professional advice, and we encourage you to seek specific advice from your professional adviser before making a decision on the matters discussed in this article. Information in this article is current at the date of this article, and we have no obligation to update or revise it as a result of any change in events, circumstances or conditions upon which it is based.
