The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Wayne Swan

Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

6 October 2010

NO.067

Consultation on Changes to Increase the Flexibility of
First Home Saver Accounts

The Deputy Prime Minister and Treasurer, the Hon Wayne Swan MP, today released for public comment draft legislation that increases the flexibility of First Home Saver Accounts.

The draft legislation follows through on the Government's commitment to allow savings in a First Home Saver Account to be paid into an approved mortgage after the end of a minimum qualifying period, rather than requiring it to be paid to a superannuation account.

This improvement to the scheme will allow account holders to purchase a home earlier than planned and still be able to put the money from their First Home Saver Account towards their new home, should their circumstances change.

This is a big win for first home hunters, giving them the flexibility to choose when to buy a house and still direct the full benefits of the First Home Saver Account towards their home.

First Home Saver Accounts provide a simple, tax effective way for Australians to save for their first home through a combination of government contributions and low taxes.

Currently, a First Home Saver Account holder is required to keep their savings in a First Home Saver Account for four financial years before they are able to use those savings to buy a home. If the account holder buys a home prior to the end of that four year period, the balance of their Account must be transferred to their superannuation so that it remains in a concessionally taxed environment.

First Home Saver Accounts provide significant concessions to help Australians buy their first home.

  • The Government contributes 17 per cent on the first $5,500 (indexed) of individual contributions made each year. That means an individual who makes a contribution of $5,500 to their First Home Saver Account will be eligible for a Government contribution of $935.
  • First Home Saver Account interest earnings are taxed at 15 per cent and withdrawals are tax free where they are used to purchase a first home.
  • Individuals are able to pool their First Home Saver Accounts to purchase a home together.

The changes will apply to houses purchased after Royal Assent of the amending legislation. However, they will apply to savings in First Home Saver Accounts opened before Royal Assent.

The draft legislation is now available at www.treasury.gov.au and consultation closes on 4 November 2010.

CANBERRA
6 October 2010