First Home Buyers Super Savings Scheme
The Government will help Australians boost their savings for their first home by allowing them to build a deposit inside superannuation. From 1 July 2017, individuals can make voluntary contributions of up to $15,000 per year and $30,000 in total, to their superannuation account to purchase a first home. These contributions, which are taxed at 15 per cent, along with deemed earnings, can be withdrawn for a deposit. Withdrawals will be taxed at marginal tax rates less a 30 per cent offset and allowed from 1 July 2018.
The First Home Buyers Super Savings Scheme will work like this:
- Home savers can salary sacrifice up to $15,000 a year into their existing super account to build up a deposit from July 1 this year.
- These contributions will be taxed at 15c in the dollar on the way in, delivering a tax advantage to those paying higher tax rates.
- A maximum of $30,000 can be saved per person or $60,000 for a couple.
- When the money is withdrawn it will be taxed at the saver’s marginal rate less 30 per cent tax offset and withdrawals can commence from July 1, 2018.
For the average person, the measure will boost their savings by 30 per cent above a conventional bank account with income taxed at their usual rate, the government estimates.
How will the First Home Buyers Super Savings Scheme be administered?
- The ATO has the primary responsibility for administering the scheme. The ATO will be responsible for determining the eligibility of the person seeking a release and for calculating the release amounts based on information provided by the applicant and superannuation funds. The main responsibility of superannuation funds will be responding to a release request authorised by the ATO.
- The ATO will also be responsible for administering compliance mechanisms to ensure that people purchase their first home after they withdraw from superannuation for their deposit. The Treasury will develop appropriate mechanisms with the ATO, which the Government will consult on before legislating, to deliver integrity while minimising compliance impacts.
Things to Note
The measure does not replace the 9.5 per cent superannuation guarantee paid by employers. It requires savers to put extra money in themselves in return for a tax benefit. Overall superannuation contribution limits will still apply under the measure, meaning that contributions through the super guarantee and any form of salary sacrifice can’t exceed $25,000 from 2017-18.
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