The Federal Government has formally approved the establishment of the First Home Savers (FHS) Accounts scheme. It is anticipated that eligible first home buyers will benefit from the scheme. The scheme will be offered through banks, building societies, credit unions and life insurers.
Although the detailed features of the scheme have not been finalised, key features include:
- co-contribution from the government of a minimum of 15% on after-tax contributions of up to $5,000;
- individuals aged between 18 to 65 will be able to open an account with an initial contribution of at least $1,000, so long as they comply with the eligibility criteria for the First Home Owners Grant;
- the minimum savings period for the scheme is four years;
- interest earned will be taxed at a rate of 15%; and
withdrawals will only be permitted for the purchase of an eligible first home and will be tax-free. Alternatively, individuals can roll over the full amount of the account to their superannuation fund at any time