15%p.a. Super Saver Account for first home buyers!
Could you imagine the attention a savings account that offered that kind of interest would receive in today’s market? Yet most first home buyers saving up for a deposit aren’t even aware of the ‘First Home Super Saver Scheme’. The scheme by the Australian Government introduced to assist people saving for their first home, can offer a tax minimisation which equates to returns of 15%p.a. in many instances!
So, what is this all about?
Well in its simplest form the Australian Government is allowing individuals to voluntarily contribute a capped amount of funds into their superannuation and then withdraw those funds to be used for a deposit on a home to live in.
To demonstrate how it works further please refer a typical scenario below.
Sandra and Michael are young working professionals who have made a committed decision to save up to purchase their first home together.
Sandra currently earns $84Kp.a., and Michael’s salary is $77Kp.a. Should the couple both look to maximise the FHSS Scheme they would both advise their employers to credit their chosen superannuation funds with $15Kpa of their pre-tax salary. The likely tax saving the couple would achieve by utilising the scheme would be the difference between their respective income tax rates and the tax rate applicable in superannuation. (In the above scenario this is 15%, or $2,250 each).
Meaning the scheme would provide the couple an additional $4,500 in savings each year. If the couple maintained this strategy for three consecutive years they would accumulate $90K between them in voluntary contributions that they would be able to withdraw from their superannuation funds to put towards a deposit in addition to the $13,500 they would have saved in taxation, a total of $103,500.
Like all schemes they are not designed for everyone but they do offer the framework for those for which they intended to take advantage of them. The above is a simple look at the scheme to provide awareness of its existence. Eligibility criteria and caps do apply. For more information refer the ATO website and seek professional assistance, First home super saver scheme
If you are looking to purchase a home, I urge you to contact Morgan Park Finance for more insights.
General non-advice disclaimer
The information contained in this article is of a general nature, is provided for education purposes only and does not constitute financial advice. It has been prepared without taking into account your particular financial circumstances or objectives. You should consider the appropriateness of the information as it relates to you. You may wish to consult an adviser before you make any decisions relating to your financial affairs.
