Sunday, 15 May 2011

First home saver accounts DID you know about this?

First home saver accounts - This won't be available for much longer so recheck in future at ato.

http://www.ato.gov.au/individuals/content.aspx?doc=/content/00250962.htm&page=1&H1 Guide to first home saver accounts


First home saver accounts offer a tax-effective way of saving for your first home through a combination of government contributions and low taxes.

They're a special purpose account that is more like a term deposit than a normal, everyday account because you have to keep the money there for a minimum period of time. Once that time has passed and you make the decision to buy or build your first home, you have to withdraw all the money at once and close the account. You need to use the money you save as a deposit or to meet other costs you incur in buying or building your first home.
Benefits
There are several good reasons to open a first home saver account. The more money you save, the more the government will contribute - up to a certain limit each year, and there's also a tax incentive to save money for your home because earnings are taxed at 15%.

Eligibility
To open one of these accounts, you need to meet eligibility conditions. You must:
    •    be aged at least 18 and under 65 years
    •    have a tax file number you can quote in your application
    •    not have previously owned a home in Australia that has been your main residence
    •    not have previously had a first home saver account.

Opening an account
Not all first home saver accounts are the same. Choose the account provider you want to have your account with and read their product disclosure statement to find out more. Banks, building societies, credit unions, life-insurance companies, friendly societies and trustees of public-offer super funds can all offer first home saver accounts.
Building your account
Once you've opened an account, you need to make personal contributions of at least $1,000 for each of four financial years before you can withdraw your money. Other people (such as your parents or other family members) can also help you out by contributing to your account.

The government will make a contribution equal to 17% of your personal contributions for the financial year, up to a maximum of $935 for the 2010-11 year.
Closing your account
To withdraw your funds, you need to have contributed at least $1,000 per year in at least four financial years and you can't just withdraw some of your money - you must withdraw the full amount and close the account.

If you change your mind about buying a home, you cannot simply close your account, withdraw your funds and spend the money. You have to transfer the balance of your account to your superannuation (unless you are aged 60 or over in which case the balance can be transferred directly to you) and you can't ever open another first home saver account.

First home saver account - home
Benefits
With first home saver accounts, the more money you save, the more the government will contribute (up to a certain limit each year). The specific benefits of a first home saver account include:

    •    The government will make a contribution equal to 17% of your personal contributions for the financial year - up to a maximum of $935 for the 2010-11 year. So if you contribute $5,500 or more to your account during the 2010-11 year, the government will contribute $935 to your account.

    •    The maximum annual government contribution will be indexed over time.


    •    Earnings on your first home saver account are taxed at 15%, but this is paid by the account provider.
    •    You don't have to report any income you earn from your account on your tax return.


    •    Withdrawing your money is tax-free.


    •    You can contribute as little or as much as you like every year, up to a maximum account balance cap over the life of the account. The account balance cap includes any earnings over the years, and contributions the government has made.

The cap is $80,000 for the 2010-11 financial year and will be indexed periodically in $5,000 increments.


You will also be able to earn interest or earnings on your savings - both your personal and government contributions - from your financial institution. Read their product disclosure statement for relevant information.
The Australian Securities and Investments Commission (ASIC) have developed a first home saver account calculator to help you work out how to reach your saving goals and compare accounts. They also have a checklist which can help you decide if a first home saver account is the right way for you to save for your first home.

To access the ASIC tools, visit their website - FIDO - at www.fido.gov.au/firsthomesaver

First home saver account - home

http://frostcrane.com/blog/2011/03/14/first-home-saver-accounts/

To be eligible to open a First Home Savers Account you must not have previously owned a home in Australia that has been your main residence.
The government will make a tax-free contribution equal to 17% on the first $5,500 you deposit each financial year (this contribution cap is indexed over time). This amount is received once a year, after you have lodged your income tax return.
Tax on any interest earned in this account is capped at 15% and the financial institution will automatically deduct this from your account and pay to the ATO on your behalf (no need to declare this in your income tax return).
Family and friends can also contribute to this account, you can even set up after-tax salary sacrifice into the account. However, the account is capped at $80,000 for the 2011 financial year (indexed over time).
For more information on first home saver accounts please contact us or refer to the ATO website.