The Federal Government has introduced the FHSSS to help Australians buy their first home. Under the scheme, you can make eligible voluntary contributions into your super account that you can then draw on to help purchase your first home.
Singles can contribute up to $15,000 per year, or $30,000 per lifetime limit to their superannuation. Couples can contribute up to $30,000 per year, up to $60,000 limit collectively.
Eligible voluntary contributions can be made from 1 July 2017, and along with investment earnings as determined by the Australian Taxation Office, can be withdrawn to purchase a first home from 1 July 2018.
Because there are tax advantages to saving within super, as a Hostplus member you could boost your savings towards a deposit by at least 30% more than you would using a standard deposit account*.
Am I eligible?
Participants in the FHSSS must:
The FHSSS will not impact your social security entitilements.
Please note: If you have previously owned a home and suffered a financial hardship, you may still be eligible to participate in the FHSSS subject to ATO’s approval.
Example: Boosting Michelle and Nick’s first home deposit*
Michelle earns $60,000 a year and wants to buy her first home. Using salary sacrifice, she annually directs $10,000 of pretax 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.
*Source: The Australian Government Fact Sheet 1.4 First Home Saver Scheme Budget 2017 available here You may also access an estimator from the Government website budget.gov.au/estimator to better understand the advantages of saving for a home deposit through super.
How do I participate in the FHSSS?
You participate in the scheme by making voluntary contributions to your Hostplus super account.
The contribution types eligible for the FHSSS are outlined below.
Salary sacrifice (before-tax)
Salary sacrifice allows your employer to make additional contributions to your super from your before-tax salary. This lowers your taxable income while boosting your super balance. Find out more here
Personal after-tax contributions for which you claim a tax deduction
If you are self-employed or your employer doesn’t offer salary sacrifice you can make personal contributions from your after-tax salary and claim a tax deduction. This effectively converts your contribution to a concessional (before-tax) contribution. You can find out how to apply for a tax deduction when you make personal contributions to Hostplus here
Personal contributions (after-tax)
You can also make after-tax contributions to your super account from your take home pay.
Be mindful of the concessional (before-tax) contributions cap of $25,000 and non-concessional (after-tax) contributions cap of $100,000 per year when contributing. For more information about contribution types and caps click here
How do I make contributions to Hostplus?
You can make one-off contributions via BPAY®, cheque or Electronic Funds Transfer. Login or register at Hostplus Member Online, for more information about making a contribution. Please note, you’ll need your member number to register.
Alternatively, you can make regular contributions by direct debit from your bank account. Just fill out the Direct Debit Authority form available here
How do I withdraw my money to buy a house?
Hostplus can advise your account balance at any time. When you are ready to withdraw the money from your super account under the FHSSS, you can apply to the ATO. The ATO will work with you and Hostplus to help you withdraw the money from your super account to buy your first home.
At the time of your application, the ATO will calculate and apply any earnings that can be released.
Salary sacrifice contributions and personal contributions claimed as a tax deduction, together with associated earnings are taxed at 15%.
When withdrawn as part of the FHSSS the total amount will be taxed at the marginal tax rates less a 30% tax offset.
For more information about applying to release your savings please visit the ATO FHSSS webpage
Is there a time limit to use the funds?
If you don’t purchase a home within 12 months of receiving the FHSSS amount you can either: