First home saver account
First Home Saver Accounts (FHSAs) were a 2007 election policy of the Australian Labor Party. FHSAs were offered from 1 October 2008 after a consultation period and passage of the First Home Saver Account Act 2008[1] through the Australian Parliament.
FHSAs offer several benefits to first home savers including:
- a variable interest rate;
- a tax rate of 15% (cf the individual's marginal tax rate), that is paid by the FHSA provider;
- 17% government contribution, up to a specified limit.
- Tax-free withdrawal.
- Flexibility in determining how much is contributed, up to a maximum account balance cap over the life of the FHSA.[2]
Eligibility
To become a FHSA holder an individual must:
- be aged at least 18 and under 65 years
- have and quote a Tax File Number in their application
- not have previously owned a home in Australia that was their main residence
- not have previously had a first home saver account.[3]
Government FHSA Contribution
For each dollar contributed to a FHSA during a financial year, the government contributes 17 cents up a specified limit.[4] This limit will increase through indexation.[5]
- For the 2008/09 and 2009/10 financial years, the Government FHSA contribution limit was $850. Therefore, to have been eligible for the full amount of the Government FHSA Contribution, the FHSA holder had to contribute $5000.
- For the 2010/11 financial year, the Government FHSA contribution increased to $935. Therefore, a FHSA holder must must contribute $5500 to their account during the 2010/11 financial year to be eligible for the full amount of the Government Contribution.[6]
Withdrawing funds
To be eligible to close their FHSA and access the funds, an individual must:
- contribute at least $1,000 per year to their account in at least four financial years – the ‘four year rule’
- intend to use the funds to buy or build their first home.[7]
Mortgage diversion
During his 2010 Budget Speech, the Treasurer, Hon Wayne Swan MP announced changes to the operation of FHSA accounts.[8] Previously, when a FHSA holder purchased a house, thus making them ineligible to hold a FHSA, the funds in their FSHA would be transferred to their superannuation account.[9] Under the proposed changes, the Government would allow funds in a FHSA to be paid into an approved mortgage after the FHSA holder satisfied the four year rule.[8]
On 6 October 2010, the Treasurer released an exposure draft on the new measures for public consultation.[10]
On 24 February 2011, Tax Laws Amendment (2011 Measures No. 1) Bill 2011 was introduced to Parliament.[11] On 10 May 2011 it passed both Houses, receiving Royal Assent on 25 May 2011.[11] According to sub-clause 2(1) of the Bill, the changes to the FHSA Act became law on 26 May 2011.[12]
Take-up
As at the December 2010 Quarter, the Australian Prudential Regulation Authority website states there are 25,600 FHSA containing AU$154.9m.[13]
Lists of FHSA providers
As at 12 September 2010, the Australian Prudential Regulation Authority website lists the following institutions as FHSA providers:[13]
- AMP Bank Limited - ABN 15 081 596 009
- Australia and New Zealand Banking Group Limited - ABN 11 005 357 522
- Big Sky Credit Union Ltd - ABN 51 087 651 358
- Commonwealth Bank of Australia - ABN 48 123 123 124
- Credit Union SA Ltd - ABN 36 087 651 232
- Defence Force Credit Union Limited - ABN 57 087 651 385
- Hume Building Society Ltd - ABN 85 051 868 556
- Hunter United Employees' Credit Union Limited - ABN 68 087 650 182
- IMB Ltd - ABN 92 087 651 974
- Members Equity Bank Pty Limited - ABN 56 070 887 679
- MyState Financial Limited - ABN 89 067 729 195
- Plenty Credit Co-operative - ABN 29 087 651 643
- Police Association Credit Co-operative Limited - ABN 33 087 651 661
- Railways Credit Union Limited - ABN 91 087 651 090
- Teachers Credit Union Limited - ABN 30 087 650 459
- The Police Department Employees' Credit Union Limited - ABN 95 087 650 799
- Victoria Teachers Credit Union Limited - ABN 44 087 651 769
- Wagga Mutual Credit Union Ltd - ABN 35 087 650 860
- Wyong Council Credit Union Ltd - ABN 29 087 650 897
- The Trust Company (Superannuation) Limited - ABN 49 006 421 638
External links
References