For Australians dreaming of buying their first home, there may be some good news. The Government announced the First Home Super Saver Scheme in the May 2017 Federal Budget. Though yet to be enacted into law, the Scheme is designed to boost savings for first home buyers.
WHAT IS IT?
The First Home Super Saver Scheme would allow you to make voluntary super contributions of up to $15,000 a year or a maximum of $30,000 in total to your superannuation to use towards your home deposit. This is in addition to any compulsory contributions you receive from your employer. When you buy a home, you will be able to use the money you’ve voluntarily contributed for this purpose, plus any deemed earnings on it, towards your deposit.
See the fact sheet outlining more details of the scheme.
WILL IT HELP ME SAVE FOR A DEPOSIT FASTER?
The Government estimates that for most people, the First Home Super Saver Scheme could boost the savings they can put towards a deposit by at least 30 per cent compared with saving through a standard deposit account1. This is due to the concessional tax treatment of superannuation and that the current interest rate on most deposit accounts is lower than the deemed interest rate that will be applied to your First Home Super Saver Scheme contributions.
Check out the ATO estimator to see how much you can save by using the First Home Super Saver Scheme.
HOW DO I ACCESS MY CONTRIBUTIONS?
If the scheme is passed, you will be able to access your funds towards your home deposit from 1st July 2018. The process for this will be administered by the Australian Tax Office (ATO), so when you are ready to purchase your home, you will need to apply to the ATO who will assess your eligibility and calculate your deemed earnings on your additional contributions. Deemed earnings are the money the ATO judges your investments to have earnt, in interest or growth for example. They will then notify us as to how much of your super savings we can release to you, and any tax considerations for you to be aware of. More information on this process will be available over the coming months.
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1 2017 Budget SpeechOCTOBER 6, 2017