First Home Saver Accounts

First Home Saver Accounts (FHSA) are new in Australia and will provide a simple, tax effective way for Australians to save for their first home through a combination of Government contributions and low taxes.

How they work.

The Government will contribute 17 per cent on the first $5,000 (indexed to CPI) of individual contributions made each year. This means if you contribute $5,000 you will receive a Government contribution of $850.

Contributions

  • Contributions may be made by the account holder or another party, such as an employer, on behalf of the account holder. Contributions must be made from after-tax income.
  • The Government will make additional contributions which will be paid directly into the account, after the individual has lodged their tax return and the provider the account is with, has submitted the relevant information to the ATO.
  • No minimum annual deposit is needed to keep the account open. The account can remain open for as long as necessary or until the account holder turns 65, at which time it must be closed.

Tax

  • Contributions will not be subject to tax when deposited in to an account.
  • Investment earnings (or interest) will be taxed at a rate of 15 per cent.
  • Withdrawals will be tax free.
  • FHSA balances will be exempt from the income and assets test.

Limit

  • There will be a limit of $75,000 (indexed to CPI) on the overall account balance.
  • If an individual reaches the account balance cap, no further individual contributions will be able to be made. Earnings and any outstanding Government contributions will still be able to be credited to the account after this time.
  • Contributions that exceed the limit will be returned to the account holder.

Eligibility & Requirements

  • An individual can open an account if they:
  • Are aged 18 or over and under 65;
  • Have not previously purchased or built a first home in which to live;
  • Do not have, or have not previously had, a FHSA; and
  • Provide their tax file number to the provider.
  • Penalties will apply if a person opens an account where they are not eligible to do so.
  • To withdraw their funds, minimum contributions of $1,000 need to be made over the course of at least four separate financial years.
  • If an account holder is purchasing a property with another individual(s) who also holds an account, only one account holder needs to meet the four-year requirement. If one person meets this, then the other individual(s) can also withdraw their funds.

Withdrawing

  • Individuals will be able to withdraw their account balance tax free to buy or build a first home in which to live. The full amount will need to be withdrawn and the account closed.
  • The individual will need to live in the home for at least 6 months within the first 12 months of purchase or completion of construction.
  • Individuals can close their account and contribute the full amount to superannuation at any time.
  • By transferring the account balance into superannuation, individuals may apply to access the superannuation early release provisions of severe financial hardship, compassionate grounds or terminal illness.
  • Penalties will apply to individuals where they fail to meet the withdrawal or occupancy criteria.

Other Circumstances

  • Where an individual’s circumstances change during the life of the account so that they no longer wish to purchase a first home, they will not be able to access the account but can transfer the balance into superannuation and close the account. Penalties will apply if funds are withdrawn and not used to purchase a first home in which to live.
  • If an individual moves overseas, they can continue to make contributions into the account, but will not receive any Government contributions.
  • Individuals will be able to access their funds tax free once they reach age 60, consistent with superannuation.

How do you apply?

You will need to complete an application form which will be available from your FHSA provider. Click here for a current list of providers.

Mortgage Stamp Duty

Stamp duty is a State Government tax which is calculated on the sale price of the property. Stamp duty is often payable on mortgage documents and is calculated on the amount borrowed.

New South Wales
Owner Occupied
From 1st September 2007, mortgage duty is not chargeable if the loan is for the purpose of owner occupied housing and is for no other purpose(s).

Investments
From 1st July 2008, mortgage duty is not chargeable if the loan is for the purpose of investment housing and is for no other purpose(s).

All Mortgage duty will not be chargeable on or after 1st July 2012.
http://www.osr.nsw.gov.au/taxes/mortgage/

Victoria
Mortgage duty has been abolished from 1st July 2004.
http://www.sro.vic.gov.au/sro/SROWebSite.nsf/taxes_duties_mortgages.htm

Queensland
Mortgage duty has been abolished from 1st July 2008.
http://www.osr.qld.gov.au/taxes/duties/types/mortgage.shtml

Western Australia
Mortgage duty has been abolished from 1st July 2008.
http://www.dtf.wa.gov.au/cms/osr_content.asp?id=184

South Australia
From 1st July 2005, all mortgages taken out for the purposes of securing a loan that has been or is to be applied for home acquisition or improvement will be exempt from stamp duty. Loans for all other purposes from the above will be charged stamp duty at the below rate:

Mortgages securing an amount Amount of Duty (from 1/7/2008)
$400 and less Exempt from duty
Greater than $400 but not more than $6,000$10
Greater than $6,000 $10 plus $0.15 for every $100 or part of $100 over $6,000

Mortgage duty will not be chargeable on or after 1st July 2009.
http://www.revenuesa.sa.gov.au/

Tasmania
Mortgage Duty has been abolished from 1st July 2007.
http://www.treasury.tas.gov.au/

Australian Capital Territory
The ACT Government does not currently impose stamp duty on mortgages or the discharge of mortgages where customers are transferring loans to another bank.
http://www.revenue.act.gov.au/duties

Northern Territory
The Northern Territory does not levy stamp duty on mortgages.
http://www.revenue.nt.gov.au/oversd.shtml

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