First home saver account
Encyclopedia
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 through the Australian Parliament.
FHSAs offer several benefits to first home savers including:
Wayne Swan
MP announced changes to the operation of FHSA accounts. 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. 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.
On 6 October 2010, the Treasurer released an exposure draft on the new measures for public consultation.
On 24 February 2011, Tax Laws Amendment (2011 Measures No. 1) Bill 2011 was introduced to Parliament. On 10 May 2011 it passed both Houses, receiving Royal Assent
on 25 May 2011. According to sub-clause 2(1) of the Bill, the changes to the FHSA Act became law on 26 May 2011.
website states there are 25,600 FHSA containing AU$154.9m.
Australian Labor Party
The Australian Labor Party is an Australian political party. It has been the governing party of the Commonwealth of Australia since the 2007 federal election. Julia Gillard is the party's federal parliamentary leader and Prime Minister of Australia...
. FHSAs were offered from 1 October 2008 after a consultation period and passage of the First Home Saver Account Act 2008 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 rateIncome tax in AustraliaIncome tax in Australia is the most important revenue stream within the Australian taxation system.Income tax is levied upon three sources of income for individual taxpayers: personal earnings , business income and capital gains...
), 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.
Eligibility
To become a FHSA holder an individual must:- be aged at least 18 and under 65 years
- have and quote a Tax File NumberTax File NumberTax File Number is an 8 or 9 digit number issued by the Australian Taxation Office to each taxpayer to identify that taxpayer's Australian tax dealings. When it was introduced in 1988, individuals received a 9 digit TFN and non-individuals were issued an 8 digit TFN. Now both are issued 9 digit...
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.
Government FHSA Contribution
For each dollar contributed to a FHSA during a financial year, the government contributes 17 cents up a specified limit. This limit will increase through indexation.- 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.
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.
Mortgage diversion
During his 2010 Budget Speech, the Treasurer, HonThe Honourable
The prefix The Honourable or The Honorable is a style used before the names of certain classes of persons. It is considered an honorific styling.-International diplomacy:...
Wayne Swan
Wayne Swan
Wayne Maxwell Swan is the Deputy Prime Minister of Australia and an Australian politician. He has been an Australian Labor Party member of the Australian House of Representatives from 1993 to 1996, and then re elected in 1998 till today , representing the Division of Lilley, QLD...
MP announced changes to the operation of FHSA accounts. 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. 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.
On 6 October 2010, the Treasurer released an exposure draft on the new measures for public consultation.
On 24 February 2011, Tax Laws Amendment (2011 Measures No. 1) Bill 2011 was introduced to Parliament. On 10 May 2011 it passed both Houses, receiving Royal Assent
Royal Assent
The granting of royal assent refers to the method by which any constitutional monarch formally approves and promulgates an act of his or her nation's parliament, thus making it a law...
on 25 May 2011. According to sub-clause 2(1) of the Bill, the changes to the FHSA Act became law on 26 May 2011.
Take-up
As at the December 2010 Quarter, the Australian Prudential Regulation AuthorityAustralian Prudential Regulation Authority
The Australian Prudential Regulation Authority is a statutory authority and the prudential regulator of the Australian financial services industry.-Regulatory scope:...
website states there are 25,600 FHSA containing AU$154.9m.
Lists of FHSA providers
As at 12 September 2010, the Australian Prudential Regulation Authority website lists the following institutions as FHSA providers:- AMP Bank LimitedAMP LimitedAMP Limited is an Australian financial corporation. It operates primarily in Australia and New Zealand. AMP formed in 1849 as the Australian Mutual Provident Society, a non-profit life insurance company. In 1998 it was demutualised and listed on the Australian and New Zealand stock exchanges...
- ABN 15 081 596 009 - Australia and New Zealand Banking Group Limited - ABN 11 005 357 522
- Big Sky Credit UnionBig Sky Credit UnionBig Sky Credit Union is an Australian based credit union formed by the current or ex-employees, contractors or service providers of BHP Billiton, BP Australia and the Royal Automobile Club of Victoria and their subsidiaries, affiliated or divested companies.As part of a round of consolidation in...
Ltd - ABN 51 087 651 358 - Commonwealth Bank of AustraliaCommonwealth Bank of AustraliaThe Commonwealth Bank of Australia is a multinational bank with businesses across New Zealand, Fiji, Asia, USA and the United Kingdom. Commonwealth Bank provides a variety of financial services including retail, business and institutional banking, funds management, superannuation, insurance,...
- 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 LimitedPolice Association Credit Co-operative LimitedPolice Association Credit Co-operative Limited is a credit union in Australia. It was founded in 1974 by a group of Police officers and has been servicing members for more than 30 years....
- 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