Home hopefuls get deposit off to a super start

ASPIRING homeowners can now pump extra money into their superannuation under the new First Home Super Saver Scheme and help fast-track saving for a house deposit.

The new program, designed to help entry-level buyers speed up their savings plan, allows users to make voluntary contributions to their fund and reap tax benefits for doing so.

But they’ll have to be patient and wait until July 1 next year to draw on the extra contributions they make.

It remains a game of wait and see to watch how many Australians will take up the scheme, but it’s hoped it won’t be a failure like the First Home Saver Accounts introduced under the Rudd government. That scheme was dumped in 2014 after only a small take-up.

The Association of Superannuation Funds of Australia’s chief executive officer, Dr Martin Fahy, said the scheme would help first-home buyers try to get their foot on the property ladder sooner, but the intricate details of the program were still being finalised by funds.

“It will be possible for people to make additional contributions, but what hasn’t been finalised to date is the mechanisms for the withdrawal at a procedural level,” he said. “Until we get visibility on it, the funds are not sure how it will operate for the withdrawal phase.”

Although the scheme has not yet been legislated by Federal Parliament, it is intended that those using it will be able to contribute up to $15,000 per year into their fund, and $30,000 in total will be able to be contributed within existing caps.

The money can then be withdrawn and used strictly for a deposit.

The extra contributions will be taxed at 15 per cent, along with deemed earnings. The withdrawals will be taxed at marginal tax rates less a 30 per cent offset.

“It would allow an individual who makes the maximum contributions under the scheme to achieve a level of savings in three years that would otherwise take four years in a standard deposit account. This assumes an individual saves $10,000 per annum in salary-sacrifice contributions over three years,” Dr Fahy said.

However, Intrust Super chief executive officer Brendan O’Farrell said he did not believe superannuation funds should be used as a vehicle to save for a first home.

“Superannuation currently has a policy objective and currently housing is not part of this policy and we should be conscious not to confuse this purpose,” he said.

“I can only hope that potential first homeowners do use the FHSA, but unfortunately it still comes down to the financial capacity to have excess savings to achieve this, which unfortunately many of our members don’t have.”