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Home arrow News arrow Categories arrow Accounting and Taxation arrow First Home Saver Accounts
First Home Saver Accounts

The Government will contribute 17% on the first $5,000.

First Home Saver Accounts

The 2008/09 Federal Budget proposals include the development of a new first home saver account. In essence, the first home saver account provides a tax-effective way for Australians to save to purchase their first home.To be eligible for the first home saver account, the applicant must:·       be aged between 18 and 65;·       have not already purchased or built a first home to live in;·       not already have or have had a first home saver account; and·       provide their tax file number to the account provider.The Government has advised that it will contribute an amount equivalent to 17% on the first $5,000 (indexed) of individual contributions made to the account each year.ExampleJane has a first home saver account and contributes $7,000 in the 2008/09 income year. The Government will contribute $850 ($5,000 x 17%) to Jane's first home saver account.Contributions made to the account are not subject to tax and investment earnings will be taxed at 15%. In addition, withdrawals from the account will be tax free.Each account has an upper limit of $75,000 (indexed) and any contributions made in excess of this limit will be returned to the account holder.The account holder will be required to live in their first home for at least six of the first 12 months after completion of construction or purchase of the property.