Legislation to implement First Home Saver Accounts was recently passed by Parliament and has become law. Account providers can offer the accounts from 1 October 2008 to assist Australians to save deposits for their first home.
For the first $5,000 that the account holder contributes into the account each financial year, the government will generally contribute 17% of that amount. There will be an account balance cap of $75,000 for the 2008-09 financial year, which will be indexed over the life of the account.
Earnings on First Home Saver Accounts will be taxed at 15%, payable by the account provider. Account holders must make contributions of at least $1,000 over four separate financial years before they can withdraw the money from the account to purchase or build their first home. The withdrawals will be tax-free.
To be entitled to have a First Home Saver Account you must be at least 18 years of age and under 65 and have never owned a dwelling in Australia or Norfolk Island that was your main residence.
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