First Home Saver Accounts
First Home Saver accounts are a new type of investment account designed to help Australians boost their savings for a deposit on their first home. This Government initiative will see super funds and banks being able to offer a superannuation style investment account that helps maximise savings through tax breaks and Government contributions.
8 Feb 2008 … On 4 February 2008, the Government confirmed its 2007 federal election commitment to establish First Home Saver Accounts to assist …
First Home Saver accounts will be concessionally taxed (like for superannuation), meaning that generally much lower tax will be paid on the investment or interest earnings of First Home Saver accounts, than for regular savings accounts or managed investments.
Who can open a First Home Saver account?
To open a First Home Saver account you will need to:
Be aged 18 to 65
Have not previously purchased or built a first home in Australia to live in;
Not currently have or previously have had a First Home Saver account.
Provide a tax file number.
How to get started
Under the enhanced First Home Saver account scheme announced in the Federal Budget in May 2008, there will no longer be any initial contribution required to open a First Home saver account. However, annual contributions of at least $1,000 must be made in four financial years to be eligible for the tax-free withdrawal for a first home.
How do the savings incentives work?
First Home Saver accounts will offer a simple, tax effective way to encourage and maximise saving for a first home deposit through a combination of Government contributions and low taxes.
First Home Saver Accounts will now attract a flat 17% Government contribution on the first $5,000 of savings made to a First Home Saver account in any year.
Low tax rates
Investment earnings (or interest) that accrues in a First Home Saver account will be taxed at a maximum of 15 per cent.
Government contributions will be tax free.
Withdrawals from a First Home Saver account used to purchase or build a first home will be tax free.