House of Representatives

First Home Saver Accounts (Consequential Amendments) Bill 2008

Second Reading Speech

Senator Faulkner (Special Minister of State and Cabinet Secretary)

I move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows-

This bill is the second in a package of three bills that implements the Government's election commitment to introduce First Home Saver Accounts to help home buyers save for their first home.

This bill supplements the main Bill, the First Home Saver Accounts Bill 2008, by proposing consequential amendments, chiefly to taxation and corporations law, that are necessary to implement the accounts.

The taxation amendments establish the tax treatment of first home saver accounts, which has the following main features.

Individual contributions to First Home Saver Accounts are not taxed when contributed to accounts because they can only be made out of post-tax income.

Government contributions to accounts are not taxed.

Earnings on First Home Saver Accounts are taxed to the account provider at the statutory rate of 15 per cent rather than to the individual account holders at their marginal income tax rates.

Withdrawals to purchase a first home are not taxed and other withdrawals are generally not taxed.

Where account holders improperly use the accounts, a tax, called the First Home Saver Account Misuse Tax, applies in specified circumstances to claw back benefits they have obtained.

The bill also contains amendments to the Corporations Act 2001 and the Australian Securities and Investments Commissions Act 2001 to ensure that the financial services licensing, conduct, advice and disclosure rules apply appropriately to first home saver accounts.

Full details of the amendments in this bill are contained in the explanatory memorandum.

I commend this bill.

Debate (on motion by Senator Faulkner) adjourned.