Saving for your first home

Starting on the 1st of July 2018 the government is going to allow First Home Buyers to pull money out of their Super Fund.  Younger Aussies starting out in their careers should take serious note, as this is possibly the best way to accumulate a deposit.

Too many people don’t really pay much attention to their Super Funds until later in life. This is because it feels like an eternity before it can be touched.

This new policy changes all that in a very good way. Lower income earners will also get a great kick here from the Government Co Contribution.  Basically for every $1 of voluntary contributions (after tax contributions) you put into your Super Fund the Government will kick in $0.50 up to $500 so that means you are getting money for free. You don’t even have to apply for it, it happens automatically when you lodge your tax return.  Over  the years this adds up and compounds.

Under the First Home Super Scheme only voluntary contributions are allowed to be pulled out.  That means you basically can’t touch your Super Guarantee payments from your employer.

Voluntary contributions include:

  • Salary sacrifice amounts or contributions for which a tax deduction has been claimed. These are taxed at 15%
  • Contributions that are made after tax or if a tax deduction has not been claimed.

Investment returns on those contributions can also be pulled out. So if you make some money in your Super then you can get your deposit even quicker. There is a formula that the ATO uses which is basically the cash rate plus 3%

If you just stick your deposit money in a bank account the government is not topping it up. So the first $1000 stays at just that. Also there is the temptation to spend that money, but if it’s in Super then it can’t be pulled out for a trip to Bali.

Young people need to get serious today and take every advantage they can get.

Call us if you would like to know more about the First Home Super Saver.  This includes parents who are putting money aside for their children in a bank account, you can open a Super Fund for your children at any age.

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