Are you wanting to increase your house deposit so you can get into the house market quicker?
Introduction First Home Super Saver Scheme
One option available to you is to increasing your rate of savings through the First Home Super Saver Scheme. This scheme is available for first home owners who are wanting to save for a deposit and enter the Australian real estate market. The scheme allows for Australians to save through their super and withdraw the funds (limits apply) when ready to purchase their first home. In this article I break down the scheme and outline the key features of this scheme.
Features of the First Home Super Saver Scheme
You are able to start making super contributions from 2017 that can be added to you super to start saving for a house deposit. The main advantage of this scheme is that it enables you to make voluntary superannuation concessional contributions that be taxed at 15% in your fund. This is subject to certain thresholds depending on the year contributed and therefore you need to first check the Australian Taxation Office (ATO) website for key thresholds and eligibility criteria. The cap for all ages in the 2023 FY is $27,500.If you were to contribute over these caps which include the super guarantee contributions that you employer makes you would be subject to the excess concessional contributions charge
There is a limit of $15,000 per year up to a maximum of $50,000 that can be contributed under the FHSSS into the superfund. Once the contributions have been made you can earn income in the form of interest on the funds contributed.
FHSSS Pros
- Increased saving rate inside super compared to bank savings
- Can receive deemed earnings on the savings inside super under the scheme
- Voluntary concessional contributions within contributions caps are taxed at 15%
FHSSS Cons
- More complex administration deposit and withdrawal requirements into super
- FHSSS release amount could be offset against any existing ATO debts
- 20 days delay to receive FHSSS amount
- Requires eligible personal voluntary superannuation contributions
- Withholding tax rate on release amounts is applied at expected marginal tax rate, including Medicare levy, less a 30% offset calculated upon tax return lodgement.
Given the complexity of this scheme, you are best to speak with a qualified tax accountant that can assist with the process of qualifying for the scheme. There are many different tax laws relating to the contributions caps, withdrawal penalties. Therefore, should you require further information as this is only a general overview, please refer to the FHSSS Tax Ruling GN 2018/1.
Summary First Home Super Saver Scheme
The First Home Super Saver Scheme allows for first home owners to start saving a deposit for their house through their superfund. This can be a great way to boost your deposit for your first home. If are are wanting more information about this scheme refer to the Australian Taxation Office website. This information is general in nature and not specific tax advice. Refer to a professional tax advisor for advice relating to your unique circumstances.
