A first home saver account was offered at several financial institutions in Australia. It was designed by the federal government to help Australians save for their first home through a combination of co-contributions and low taxes. However, this program is recently replaced by the First Home Super Saver scheme.
What is a First Home Super Saver Scheme?
To assist first home buyers to save a deposit for their home faster, the government announced the introduction of the First Home Super Saver Scheme, which allows first home buyers to make deposits within their super fund.
This article will explain what you need to do if you have the previous first home saver account, and how the new scheme works.
The first home saver account was introduced by the Rudd government in 2008 and has two main benefits. The government gave savers 17% bonus for the first $6000 that was contributed by the saver each year. Second, the interest you earn was taxable only by 15%, with accordance to the Australian Securities and Investment Commission.
In order to assist first home buyers to save a deposit for their home faster, the government announced the introduction of the First Home Super Saver Scheme in May 2017, which allows first home buyers to make deposits within their super fund. Voluntary contributions made to superannuation after July 1, 2017 can be withdrawn by July 1, 2018. A maximum amount of $30,000 of personal contributions can be released as well as the earnings and up to $15,000 of voluntary contributions made in a financial year count towards the amount that can be released.
Please note that voluntary contributions include:
- undeducted (non-concessional) personal contributions.
- deducted (concessional) personal contributions
- salary sacrifice contributions.
In addition, concessional contributions and earnings that are withdrawn will be taxed at marginal rates less than a 30% offset.
For most first home buyers, this First Home Super Saver Scheme could boost the savings they can put towards a deposit by at least 30% compared with saving through a standard deposit account. This is due to the concessional tax treatment and the higher rate of earnings often realised within superannuation.
The First Home Super Saver Scheme is administrated by the Australian Taxation Office (ATO) and you can find out more information about the First Home Super Saver Scheme on ATO’s website.
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