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First Home Buyers’ Super Deposit Opportunity

A major roadblock for people trying to get into their first home is saving up a sizeable deposit, however legislation has recently passed that will enable eligible first home buyers to save for their deposit through the First Home Super Saver Scheme (FHSSS). The scheme aims to help participants accumulate a larger deposit when compared to saving outside super.

Prerequisites for Participation

Generally, participants in the FHSSS need to be aged 18 years or over, never used the scheme before and never owned property in Australia. It is important to note that you may still be eligible if you plan to purchase a home with a partner who doesn’t meet the criteria.

Contributions to the FHSSS

Contributions have been open from 1 July 2017, and can be withdrawn from 1 July 2018, and only voluntary super contributions made to your super fund will count towards your FHSSS balance. These are defined by the government as personal, salary sacrifice and additional employer contributions, but importantly does not include compulsory employer contributions (i.e. Super Guarantee) and certain other amounts. Voluntary contributions to the scheme are capped at $15,000 per year, up to a total value of $30,000.

Withdrawing your contributions

Withdrawals are limited to $30,000 plus associated earnings, and the Australian Taxation Office (ATO) will calculate them based on their formula, not the actual earning rate. In addition, the ATO will determine the amount that can be released to a participant after allowing for applicable taxes. It is possible to withdraw from the scheme before you have found a place to buy, but you will need to buy within 12 months of withdrawing (or if not, the ATO may grant a further 12 month extension).

What can you buy, and what happens if you don’t buy?

Regardless of the amount you withdraw using the FHSSS, you must buy a residential premises, which includes vacant and if you are planning to build. The premises has to become your home (rather than an investment property) by occupying it for a minimum of 6 months after you buy or build. If you don’t buy within the required timeframe, you are able to put the released money back into super, or keep the money and pay tax equal to 20% of the assessable amount.

If you have any questions about the FHSSS and would a free initial 30 minute consultation, contact McKinley Plowman on 9301 2200 or visit www.mckinleyplowman.com.au

written by:

Aaron McCracken

Aaron has over twenty years of experience in the financial services industry working with large companies and small businesses across all aspects of financial planning. He has broad experience across superannuation (including self-managed superannuation), investments, estate planning and personal insurance, retirement planning and business succession planning.
Aaron is passionate about the value of professional, client-focused advice and enjoys working closely with clients to help them make smart decisions with their money, as well as aiding them to clarify and achieve their financial aspirations.