New legislation was passed in December 2017 which is aimed at assisting Australians to purchase their first home.
The First Home Super Saver Scheme allows clients who are saving for a deposit on their first home to make voluntary contributions to superannuation. However unlike most superannuation savings, these contributions can be subsequently withdrawn well before retirement to pay a deposit on a first home.
These voluntary contributions will be limited to $15,000 per year with a maximum across all years of $30,000. Depending upon individual circumstances, some or all of these contributions could be tax-deductible.
When the time comes to purchase your home, the contributions (less any tax paid) plus associated earnings can be withdrawn and would be included in the client’s taxable income. However a 30% tax rebate would be applied.
We believe this scheme shows promise for those who have a long-term aim to purchase their first home. The tax deduction will be attractive as an incentive to save and the funds will then be invested in a 15% low tax environment. It is always frustrating for home savers to find that earnings on their savings is heavily taxed because it is added to their own employment or business income, so this is a definite improvement.
Importantly, although the legislation has just been enacted, it is applicable for this financial year, so serious home savers should seek advice if they are considering making contributions before 30 June 2018.