Sub category: Superannuation
10 January 2018

Could your super be the secret to home ownership?

Let’s be real for a minute – saving for a house is tough. It can take ages to raise the money for a deposit, even if you’re consistent with your savings plan. Luckily, now there’s a way to save faster. With the Government’s new First Home Super Saver Scheme (FHSSS), you may be able to help save for a home deposit through  your super account. Check out the answers to some of the frequently asked questions about the FHSSS below.

What is it?

The FHSSS is a benefit created by the Australian Government to help first home buyers save for a home deposit.

Sorry, the FH...what? If there’s one new acronym to keep in your vocabulary, it’s FHSSS - the First Home Super Saver Scheme. With it, you can make voluntary super contributions (up to the annual contribution limits), and withdraw it from your super account later to buy your first home!

Once you’re ready to buy, you apply to the Australian Taxation Office (ATO) to withdraw the amount to put towards your home loan. You can withdraw up to a maximum of $15,000 from any one financial year and $30,000 in total across all years of the eligible contributions you make – this includes a deemed earnings rate on your contributions calculated by the ATO (rather than the actual earnings).

Then it’s time to enter the property market!

Once you withdraw, you have 12 months to sign the contract to purchase or build a home, and you’ll need to occupy it for at least six months of the first year after the purchase or when it is practicable to do so. If not, you might have to apply for an extension from the ATO, recontribute the amount withdrawn back to your super or you may be liable for further tax.

How do the contributions work?

There’s no need to tell your super provider that you’re contributing for the FHSSS. The scheme counts eligible funds you add to your super account proactively, outside the compulsory ones your employer makes. Check out an overview of the different types of contributions you can make here. Note that contributions to a defined benefit fund or constitutionally protected fund are not eligible.

Up to $15,000 of voluntary contributions per financial year can count towards the $30,000 total you can withdraw.

What’s the benefit?

On the surface, it sounds a lot like a glorified savings account. In a way it kind of is, and you might pay less tax on the money you contribute.

Pre-tax super contributions, like salary sacrifice and personal contribution where a tax deduction is claimed, are taxed at the fund’s rate of 15%, rather than at your marginal tax rate. Not only that, the contributions you make could achieve extra earnings through the investments your super fund offers.

Saving in your super could help you put away thousands of extra dollars for your first deposit.

You can check out how much you’ll save by entering in your income and super contributions in the First Home Super Saver Scheme estimator.

When does it start?

The changes apply to voluntary contributions made into super on, or after, 1 July 2017. You can  withdraw funds from 1 July 2018 onwards.

Who can claim it?

To withdraw contributions under the FHSSS, applicants must:

  • Be aged 18 years or older
  • Have never owned property in Australia
  • Not use the FHSS amounts to purchase:
    • Any premises not capable of being occupied as a residence
    • a houseboat
    • a motor home
    • vacant land
  • Have not previously used the FHSSS benefit

The ATO is responsible for determining what you can withdraw and issuing the release authority to your super fund. Your super fund will then send the amounts to the ATO who will deduct the appropriate amount of tax and send the balance to you. To apply you’ll need to complete the form that will be available on the ATO website from 1 July 2018.

Are there any limits to the contributions I can make?

As we mentioned earlier, a total of $30,000 of contributions count towards the FHSSS, and up to $15,000 from each financial year can make up this total.

Keep in mind there are still normal super contribution caps. You can contribute up to $25,000 for concessional (pre-tax) contributions (this includes your employer contributions), and up to $100,000 for non-concessional (post-tax) contributions in the 2017/18 financial year ($300,000 if you are eligible under the bring-forward rule).

Compulsory employer contributions (generally the SG amount that your employer puts into your super account) cannot be withdrawn as part of the benefit.

There you have it!

Taking advantage of the FHSSS means you’ll build up the money for your first home deposit faster. There are conditions that apply – the ATO website lists what you need to do First Home Super Saver Scheme.   If you have any questions get in touch and we’ll chat you through it. Call our Super Specialists on 133 464 (8am-8pm Monday to Friday, 9am-5pm Saturday AEST/AEDT).

Read on to find out how you can nurture your super anytime and anywhere.

The information is current as at publication. Any advice on this website does not take into account your objectives, financial situation or needs and you should consider whether it is appropriate for you. Deposit products, savings products, credit card and home loan products are issued by ING, a business name of ING Bank (Australia) Limited ABN 24 000 893 292, AFSL and Australian Credit Licence 229823. ING Living Super (which is part of the ING Superannuation Fund ABN 13 355 603 448) is issued by Diversa Trustees Limited ABN 49 006 421 638, AFSL 235153 RSE L0000635. The insurance cover offered by ING Living Super is provided by Metlife Insurance Limited ABN 75 004 274 882, AFSL 238096. ING Home and Contents Insurance is issued by Auto & General Insurance Company Limited (AGIC) ABN 42 111 586 353 AFSL Licence No 285571 as insurer. It is distributed by Auto & General Services Pty Ltd (AGS) ABN 61 003 617 909 AFSL 241411 and by ING as an Authorised Representative AR 1247634 of AGS. All applications for credit are subject to ING's credit approval criteria, and fees and charges apply. You should consider the relevant Product Disclosure Statement, Terms and Conditions, Fees and Limits Schedule, Financial Services Guide, Key Facts Sheet and Credit Guide available at ing.com.au when deciding whether to acquire, or to continue to hold, a product. Before interacting with us via our social media platforms, please take a minute to familiarise yourself with our Social Media User Terms https://www.ing.com.au/pdf/Social_Media_User_Terms.pdf.

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