In an effort to help more first home buyers get into the property market, the Government introduced the First Home Super Saver Scheme in the 2017 budget. From 1 July 2017, individuals can make voluntary contributions of up to $15,000 per year and $30,000 in total, to their superannuation account to purchase a first home.
Voluntary contributions include:
- Non-concessional personal contributions
- Concessional personal contributions
- Salary sacrifice contributions
These contributions, which are taxed at 15%, along with deemed earnings, can be withdrawn for a deposit from your SMSF. Withdrawals will be taxed at your marginal tax rates less a 30% offset and allowed from 1 July 2018.
For most people, the First Home Super Saver Scheme could boost the savings they can put towards a deposit by at least 30% compared with saving through a standard deposit account. This is due to the concessional tax treatment and the higher rate of earnings often realised within superannuation. Take Michelle and Nick’s case as an example to see how you can boost the first home deposit by utilising the First Home Super Saver Scheme
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.
The contributions you make for the first home saver super scheme will be allocated to a separate account which is distinguished from the guaranteed employer contributions. Our accounting system can accommodate this new change and a separate single line item will be displayed in the SMSF Financial Statements showing the first home super saver contributions.
For more information on recent budget changes, please see our Super Changes page here.