2017/18 Budget - First Home Super Saver Scheme

May 10, 2017

From 1/7/17, individuals looking to save to purchase their first home are eligible to make voluntary contributions of up to $15,000 per year and $30,000 in total to their superannuation account and use the funds to purchase a first home.

The budget papers suggest that for most people this will result in boosting the amount of savings that can be put towards a deposit by at least 30% compared with saving in a standard deposit account. The additional amount is achieved through tax concessions, by saving tax on your personal income (by either salary sacrificing or claiming a tax deduction on personal contributions) and on your investment earnings.

The amount that is eligible to be withdrawn from the Fund is the total of voluntary contributions made from 1/7/17 less contributions tax (15%) plus deemed earnings which are calculated at a higher rate than regular bank account earnings. You will then be taxed in your personal return on the withdrawal amount less a 30% tax rebate.

Below is an example extracted from the budget papers to show how the scheme can work:

Michelle earns $60,000 a year and wants to buy her first home. Using salary sacrifice, she annually directs $10,000 of pre-tax income into her superannuation account, increasing her balance by $8,500 after the contributions tax has been paid by her Fund. After three years, she is able to withdraw $27,380 of contributions and deemed earnings on those contributions. Her withdrawal is taxed at her marginal rate (including Medicare levy) less a 30 per cent offset. After paying $1,620 of withdrawal tax she has $25,760 that she can use for her deposit. Michelle has saved around $6,240 more for a deposit than if she had saved in a standard deposit account. Michelle's partner Nick has the same income and also salary sacrifices $10,000 annually to superannuation over the same period. Together they have $51,520 that they can put towards a deposit, $12,480 more than if they had saved in a standard deposit account.

Be sure to seek advice before commencing this strategy to ensure it will work for your specific circumstances.