First Home Super Saver Scheme: What to know and do
Announcement posted by Chan & Naylor 02 Oct 2017
To alleviate our home affordability problem, the First Home Super Saver Scheme will allow a first home buyer to opt in to the scheme with ATO and sacrifice up to $15,000 of his salary each year. The employer will transfer the amount into his super with the 9.5% compulsory super contributions which he may then withdraw once it hits the $30,000 cap.
Starting 1 July 2018, first home buyers may access their superannuation to withdraw voluntary contributions made from 1 July 2017, including deemed earnings to help them buy their first home. An individual may contribute up to $15,000 per year and $30,000 in total to superannuation.
Couples may individually take advantage of this scheme to buy their first home as well. They can come up with a combined contribution of up to $30,000 per year and $60,000 in total. The non-concessional contribution cap will be $100,000 per financial year and and can be tax free. Voluntary concessional contributions, on the other hand, will be capped at $25,000 and taxed at 15%.
Investment earnings that can be withdrawn will be computed at a deemed return rate, which is the 90-day bank bill rate plus 3%. A 1.74% 90-day bank bill rate will have a deemed return rate of 4.74%. Concessional contributions and earnings used to purchase a home will be taxed at the individual's marginal tax rate less the 30% tax offset. Meanwhile, non-concessional contributions are tax-free but the earnings may be taxed at the individual's marginal tax rate less the 30% tax offset just the same.
The ATO will administer the First Home Super Saver Scheme, which means they will be the one to determine the amount of contributions which can be released and instruct the super funds to withdraw. The ATO will also make sure the funds are used to buy a first home.
For those who want to buy a home in the coming years, they better start the scheme early. The pre-tax contributions will be limited to the cap of $25,000 so those who earn $120,000 would receive a minimum of $11,400 in super guarantee contributions a year. This means they will be limited to $13,600 per year of voluntary concessional contributions.
The scheme is said to accelerate buyer savings by a minimum of 30%. However, depending on the area, $30,000 may not be enough deposit to purchase a home. First home buyers may still need to boost the amount with additional savings or depositing the money into a high interest savings account or term deposit with a competitive interest rate. Taxpayers will also pay $250 million for the scheme over the next four years. The First Home Super Saver Scheme has yet to be released.
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