With housing prices on a never-ending rise across Australia, comes the increased difficulty to save a bulky deposit – this is where the First Home Super Saver Scheme comes to the rescue in attempt to ease that pain a little for first home buyers.

Let’s take a more in-depth look at what it is exactly, and how it works.

What is the Super Saver Scheme?

It’s a scheme in its introductory processes developed by the government that will allow first home buyers to utilise a chunk of their superannuation to assist with getting a deposit together earlier.

This will mean that the house deposit will be built upon inside the superannuation fund, with the ability to deposit up to $15,000 per year, within a maximum of $30,000.

Withdrawals may be made from 1^st July 2018 and will be taxed at the marginal rate, minus an offset of 30%.

The idea behind the scheme is that it can allow people to save up to 30% more in a shorter timeframe, compared to a standard savings account. Salary sacrifice arrangements may also be used to an employee’s benefit with this scheme.

Why don’t we look at an example?

Example Scenario: 

Michael and Annie want to buy their first home and are amid the deposit-saving dread.

If Michael deposited $10,000 into his super, he’d have $8,212 in his account for a deposit (after tax).

After 3 years, Michael would have $25,892 in the account by depositing $10,000 every year.

If his partner Annie deposits the same $10,000 over the same 3 years, they’ll have a total of $51,784 combined.

FAQ’s of the First Home Super Saver Scheme

How much am I allowed to contribute?

You can deposit up to $15,000 per year with a limit of $30,000.

How can I access the money? 

You’ll need to apply to the ATO for approval to withdraw or use your deposited funds. If you are eligible and approved, your funds will be arranged to be made available to you. There are proposed regulations surrounding the time frame in which you are eligible to use those funds to buy your home.

Am I eligible? 

You would be eligible to withdraw your savings under the scheme if:

• You are over the age of 18.
• You have never used the scheme in the past.
• You have never owned a property in Australia – if you’ve owned investment properties before, you are unfortunately not eligible.

What’s the time limit on using the funds? 

You are required to purchase a property within 12 months of the funds being released. However, you can submit a request to the ATO for an extension of up to 12 months if more time is required.

What if I decide not to buy a home after withdrawing the funds? 

You’ll need to redeposit those funds back into the super account, or pay tax equal to 20% of those funds.

How much am I allowed to withdraw?

You can withdraw as much as you’ve contributed, minus the tax payable depending on what type of contributions you’ve made.

Am I required to actually live in the house?

Yes. You are required to live in the home purchased with these funds. You must occupy the property for 6 months out of the 12 months that it’s practical for you to do so.

What happens if I purchase land and want to build on it? 

You will be required to live in the house for a minimum of 6 months, within the first 12 months of the house being completed.

What type of property am I permitted to buy with the funds? 

Any residential property including houses, land and apartments. Commercial property is not allowed.

How much tax is withheld? 

The ATO withholds tax prior to releasing the funds. This is to make sure you are not required to pay tax on these funds as well in your proceeding tax return. It would be a best estimate of your tax payable. In the event that an estimate is not able to be made, 17% of the withdrawn funds will be withheld.