Wishing to purchase your first home? 
You should read this.

First Home Super Saver Scheme (FHSSS)
The FHSSS allows eligible first home savers to withdraw funds from super to purchase a home. The amount allowed to be released from super consists of eligible non-concessional contributions and 85% of voluntary concessional contributions (and associated earnings) made from 1 July 2017.

​Lets break this down to get a clearer understanding:
Non-concessional contributions: these are after tax contributions made for which an individual or employer hasn’t claimed a tax deduction.

Voluntary Concessional Contributions: the keyword here is voluntary. Voluntary contributions covered by the scheme include:
  • Non-mandated employer contributions, such as:
    • Salary sacrifice contributions
    • Voluntary employer contributions
  • Member contribution made by the member, such as:
    • Personal deductible contributions
    • Non-concessional contributions made by the member

​Contributions which are not eligible include:
  • Mandatory employer contributions (eg super guarantee contributions).
  • Spouse contributions
  • Government co-contributions
  • Contributions to defined benefits funds and constitutionally protected funds

First home savers will be able to make their first withdrawal from 1 July 2018.
 
How does it work?
The ATO will calculate the amount of earnings on the contributions and include that in the total in the releasable amount. The calculated earnings rate is the Shortfall Interest Charge (SIC) rate which is the 90-day bank bill rate plus 3 per cent. The SIC is currently 4.70%.

The maximum amount of contributions made in a particular financial year that may be released is $15,000 with a maximum of $30,000 (total) per eligible individual. This means a couple saving for a first home could contribute up to $60,000 combined.

All associated earnings plus any voluntary concessional contributions in a withdrawal will be taxed at the individual's marginal tax rate with a 30% non-refundable tax offset. Any non-concessional contributions will not be taxed but again the associated earnings on these contributions will be taxed.

How could this benefit you?
The government has released a First Home Super Saver Scheme - Estimator which indicates the potential benefit of the scheme.
 In summary some of the benefits can include:
  • Reduction in personal tax - investment earnings will be taxed within the super environment and not in your personal name. In additional voluntary contributions can be in the form of personal deductible and salary sacrifice contributions which may reduce your taxable income.
  • Better budgeting - entering a salary sacrifice arrangement can help you budget via 'forced savings'. In addition, the associated earnings formula provides a relatively stable return which is higher than what can be achieved on a term deposit.
 
If you are looking to purchase your first home and feel you may be eligible, we encourage you to visit the First Home Super Saver Scheme - Estimator link and contact our office to discuss potential options.