A new alternative for first home deposit savings are now available via the First Home Super Saver Scheme (FHSSS).
Individuals will be able to access certain superannuation benefits to assist with the purchase of their first home. Those who take advantage of the scheme may have a greater amount available as a first home deposit.
What superannuation benefits can be accessed?
Voluntary superannuation contributions made by, or on behalf of, a first home buyer from 1 July 2017 can be accessible under the FHSSS.
A ‘first home buyer’ is an individual who has never held an interest in real property situated in Australia (or certain mining, quarrying or prospecting rights).
These contributions are limited to non-mandated employer contributions (for example certain salary sacrifice contributions) and personal contributions.
How much can be released?
From 1 July 2018 you can then apply to release your contributions, along with associated earnings, to help you purchase your first home. You must be 18 years or over to apply for the release of these amounts.
The maximum contributions that may be released are limited to $15,000 per financial year and $30,000 in total, plus associated earnings in respect of those contributions. Note that where the withdrawal includes concessional contributions, only 85 per cent of the contribution will be released to account for the tax paid by the super fund in respect of those contributions.
What is the tax treatment of the withdrawal?
The part of the FHSSS withdrawal that relates to concessional contributions and total associated earnings (first home super saver (FHSS) assessable amount) will be included in the individual’s assessable income and taxed at marginal rates, with a 30 per cent non-refundable tax offset applying.
How to contribute
You can contribute into any super fund. It is also possible to contribute into more than one fund.
Before you start saving:
- Check that your nominated super fund/s will release the money. (FHSS contributions may not be released from defined benefit interests or constitutionally protected funds.)
- Ask your fund about any fees, charges and insurance implications that may apply.
Purchasing the property
First home buyers will have 12 months (or up to 24 months if an extension is granted by the ATO) from when funds are released from superannuation to enter into a contract to purchase or construct a residential property. The purchase price of the property must be equal to or greater than the amount withdrawn from superannuation. The individual must also have an intention to move into the property as soon as practical and live in it for at least six months of the first 12 months.
More information is available on the ATO website or contact your adviser at WLM Financial Services.
Source: Macquarie Technical, ATO