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First home saver account
Abolition of the first home saver accounts (FHSA) scheme
In the 2014-15 Budget, the Federal Government announced the following changes to abolish the first home saver accounts scheme;
New accounts from 7.30pm, Tuesday 13 May 2014 will not be able to access any concessions or the government contribution.
Eligibility for a government contribution will cease from 1 July 2014. Existing account holders will continue to receive the government contribution for personal contributions made during the 2013-14 income year.
Tax and social security concessions will cease from 1 July 2015. Existing account holders will continue to receive all tax and social security concessions associated with these accounts for the 2013-14 and 2014-15 income years.
Restrictions on withdrawals will be removed from 1 July 2015.
Once the first home saver account scheme is abolished from 1 July 2015, these accounts will be treated like any other account held with a provider.
The existing rules will continue to apply until the law is changed. For more information on this proposal, see our new legislation web page on the Abolition of the first home saver accounts (FHSA) scheme.
A first home saver account (FHSA) is a special purpose account designed to help people save for their first home. You can open an FHSA with an ordinary financial institution but you need to meet qualifying conditions before you can access the funds – you must meet the ‘four-year rule’. Once you’ve accessed the money, you must use it for a deposit or for other costs associated with building or buying your first home. If you don’t, you may be liable for the FHSA misuse tax.
You and other people (like your family or employer) can make deposits into your FHSA. Once a year, the government will make a lump-sum contribution to your FHSA, based on the amount deposited into the account during that year.
Work it out
When you’re ready to access your funds you must transfer the full balance otherwise any funds remaining will generally go into your super fund.
Do you meet the four-year rule?
When funds are deposited into your FHSA you receive contributions from the government. You also benefit from a low tax rate. Other government agencies may also be able to help you save for your first home.
You must meet four conditions to open and hold an FHSA. Usually, you can only have one FHSA in your lifetime but there are some conditions where you may be eligible to open another.
Inactive accounts and lost eligibility
If you purchase a home before meeting the minimum qualifying period, your account will become inactive. If you lose eligibility to hold an FHSA, your money could be transferred to your super fund.
Opening an account
When you’re ready to open an account you should contact a financial institution, also known as an ‘account provider’. You can move your FHSA between account providers.
Contributing to your account
You can make deposits into your FHSA. Other people (such as family or your employer) can also make deposits on your behalf. The government will make contributions to your account based upon these deposits.
Accessing your funds
You must meet ‘the minimum qualifying period’ (also known as the ‘four-year rule’) before you can access your funds. There are also rules around how you spend the funds, how long you have to spend the funds and how long you must live in your first home once you have built or bought it.
Family law obligations
If your relationship breaks down, you may have an obligation to divide your FHSA funds with your former spouse.
If you are an executor or an administrator of a deceased estate, you may have certain obligations in relation to the deceased’s FHSA.
More help for account holders
We have checklists, fact sheets and other resources to help you build or buy your first home with FHSA funds.
Information for account providers
Financial institutions must meet a range of obligations and perform certain tasks when they manage FHSA activity.
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