Since 1 July 2017, you have been able to make voluntary contributions to your super account to save for your first home. Singles can contribute up to $15,000 per year, with a maximum total of $30,000. Couples can double that, contributing up to $60,000 in total over a two-year period (or longer).
Withdrawals can be made from 1 July 2018 and will be taxed at your marginal tax rate less a 30% rebate.
Putting your house deposit savings into your super account means you can’t touch it for any other purpose but it also means you may grow your house deposit through the investment earnings made by your super fund.
The Government has suggested that by utilising the scheme you may be able to boost your savings by at least 30% more than if it was deposited in a standard savings account. Both the higher earning rates from the super environment and concessional tax treatment contribute to these benefits.1
The scheme is open to first home buyers over the age of 18 and home buyers who are suffering ‘financial hardship’. The rules surrounding who qualifies under ‘financial hardship’ are yet to be released.
The FHSSS is strictly for the benefit of first home buyers and those experiencing ‘financial hardship’. It’s not for the purchase of an investment property. You must live at the property for a minimum six months out of 12 and move in as soon as you can.
The property can be in the form of a vacant block you intend to build on. However, mobile homes or houseboats don’t qualify.
There are two ways you can make extra contributions:
Right now. Contributions made from 1 July 2017 can count towards the FHSSS. Your contribution and its deemed earnings can be accessed after 1 July 2018.
The Australian Taxation Office (ATO) manages the entire process. To withdraw, you apply to the ATO. They calculate the additional earnings and tax payable on the withdrawal and release the money to you from your super fund.
Yes. Once the money is released to you, you have 12 months to sign a contract. You also have the option of applying for a 12-month extension with the ATO if things don’t go to plan.
The money you withdrew for the house deposit would either need to be re-contributed into your superannuation fund or you’ll be required to pay a 20% tax penalty on the withdrawn amount.
There are many complexities relating to the FHSSS and it may suit some more than others. It’s important to understand the legislative requirements and the mechanics of how it operates before making any decisions.
If you want to know more about this legislative change and how it can help you, we’ll step you through it. Just contact us.
Potter Building – Ground Floor, Mater South Brisbane Campus
Annerley Road South Brisbane Queensland
1300 368 891
information@mercysuper.com.au
