22
May
2017

First Home Super Saver Scheme

So what is the First Home Super Saver Scheme?

One of the proposals in last week’s federal budget was the introduction of the First home super saver scheme. The aim of the policy is to make it easier for first home owners to enter the market.

From 1 July 2017, individuals will be able to make voluntary contributions (eg salary sacrifice and non-concessional contributions) of up to $15,000 per year and $30,000 in total, to their super account to purchase a first home. These limits apply to each individual so a couple can contribute up to $30,000 per year and $60,000 in total.

Voluntary contributions under this scheme must be made within existing super caps.

Withdrawals of the contributed amounts along with the deemed earnings will be allowed from 1 July 2018. The amount of earnings that can be released will be calculated using a deemed rate of return based on the 90-day Bank Bill rate plus three percentage points (currently this equates to 4.78%). 

The withdrawals of concessional contributions and associated earnings will be taxed at the individual’s marginal tax rate, less a 30% tax offset. When non-concessional amounts are withdrawn, they will not be taxed, but we anticipate that the earnings will be taxed at the individual’s marginal tax rate, less a 30% tax offset.

The First Home Super Saver Scheme will be administered by the Australian Tax Office (ATO), which will determine the amount of contributions that can be released and will instruct super funds to make these withdrawal payments. The ATO will also be responsible for compliance to ensure that people purchase their first home after they withdraw from super for their deposit.

The essence of the scheme is that we are able to get concessions for saving for our first home; this is a good thing no doubt, but there a limitations. Most notably it is only for the FIRST home, which is fine, except in the situation that your partner (or future partner) already owns or has owned a property. If this is the case then money you have contributed to super with the aim of buying a property will not be able to be withdrawn and may remain preserved.

The investment strategy for these savings should be different to the strategy for the rest of the funds in Superannuation. I fear many may get this wrong. The funds for the home will have a short time frame and should be invested far more conservatively than funds that purpose is to provide income in retirement. Funds for super can risk short term loss for long term gain, this is not the case with a house deposit.

 

This is definitely not a one size fits all strategy for those saving for their first home, but in many cases it is a another strategy that can help us achieve our goals.

Author; Alex McKenzie Categories: Future Financial Services Blog

About the Author

Alex McKenzie

Alex McKenzie

Owner at Future Financial Services

Past:

  • Paraplanner at Zammit Partners Investments
  • Unit Trust Administrator at Colonial First State

Education

  • University of Western Sydney
  • Penrith High

About

As a Financial Planner I help people to achieve what they would like in life. This involves helping you to identify the things in life they would like , developing plans to help achieve them and strategies to protect what you already have. We do this by providing Financial Advice to guide you through your life stages.

The financial planning process involves determining a clients current situation and financial objectives and tailoring strategies to assist in best achieving those objectives.

I am an expert in superannuation, investments and insurance, these are tools we use to help you achieve your goals.

I aim to use my knowledge of superannuation, taxation and Centrelink to efficiently use your assets and income to achieve your financial goals.

Retirement and pre-retirement planning, wealth creation, asset protection, insurance planning and estate planning are all areas of advice that I provide.

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