$50,000 to be permitted in First Home Super Saver Scheme withdrawals

The federal government has announced that the federal budget will increase the maximum amount of voluntary contributions that can be released under the First Home Super Saver Scheme from $30,000 to $50,000. The FHSS Scheme was launched in the May 2017 budget designed to allow first homebuyers to use their super account to save some of the money they need for a home deposit. The First Home Super Saver Scheme involves making before-tax contributions to superannuation. The deposit comes by portioning a part of the aspiring first home buyer's income to be put into super account before tax. It provides a lower tax scenario for the deposit being accrued. All contributions must be voluntary contributions, so Superannuation Guarantee (SG) amounts paid by your employer cannot be directed towards the FHSS savings. FHSS contributions using a salary sacrifice arrangements can be used. FHSS participants can not have previously owned a home in Australia, including an investment property, vacant land and commercial property. Purchasers are obligated to live in the property for at least six of the first 12 months after purchase. Previously the maximum a person can contribute each year under the FHSS Scheme is $15,000, with the maximum a person can save in total under the FHSS Scheme being $30,000. “The expansion of the First Home Super Saver Scheme to allow the funds that can be withdrawn from $30,000 to $50,000 will boost its popularity and take up," said Denita Wawn, CEO of Master Builders Australia. "Harnessing the power of compound interest in superannuation to save a deposit makes sense,” she said. The FHSS does not permit access to the regular 9.5% super contributions. The number of home builders through the scheme has been limited to date given the complexity of the scheme and the years required to build up a deposit.