First Home Saver Accounts (from 1 October 2008)
Received Royal Assent on 25 June 2008
Outline of arrangements
The main points:
> To be eligible you must:
- be age 18 to 64.
- be eligible for the First Home Owners Grant (see link below).
- do not have or have not previously held a First Home Saver Account.
- have not previously purchased or built a first home in Australia (or Norfolk Island) to live in.
- invest at least $1,000 per annum over at least 4 separate financial years.
- provide your tax file number.
> The accounts will be offered by most banks, building societies, credit unions, public offer superfunds and life companies with investment options and rates to be decided by the institutions.
> Eligible individual contributions up to the annual threshold (refer above) by Australian residents will attract a Government contribution.
> The Government contribution will be a flat rate of 17% irrespective of income or marginal rate.
> There is no limit on annual contributions, but no further customer contributions can be made once the overall account balance reaches the account balance cap. (Refer below.)
> Investment earnings or interest that accrues in the accounts will be taxed at 15 per cent.
> Withdrawals will be tax free where they are used to purchase a first home located in Australia to live in. (The account holder must live in the purchased home for a continuous period of six months within the first 12 months of purchase or construction).
> Contributions are made from after tax income.
> If the account holder does not buy a home they can not withdraw the money until they turn 60. If they are under 60 they can roll it into super.
> First Home Saver Account balances are not counted for the other Government benefits assets or income tests.
>If an account holder buys a home before meeting the 4 year requirement, the First Home Saver Account must be rolled to super.
From 25 May 2011:
Individuals who purchase a home before the 4 years have expired, are allowed to roll the balance of their FHSA into their mortgage after the 4 years have expired, rather than having to roll it to super.
For more information refer below.