First Home Saver Accounts

The Government has confirmed its intention to establish First Home Saver Accounts from 1 July 2008 to assist Australians to save for their first home.

The account may be opened by individuals aged 18 and over who:

• has not previously purchased or built a first home in Australia to live in;
• does not have or has not previously had an account; and
• makes an initial contribution of at least $1,000.

Individual contributions of up to $10,000 (indexed) may be made into an account each year. These contributions may be made by the account holder or another party, such as an employer, on behalf of the account holder. 

Contributions have to be made from after-tax income. Contributions will not be subject to tax when contributed to an account.

The Government will make an additional contribution which will be paid directly into the account. The contribution level (based on a maximum benefit of $5,000 of individual contributions) will be either 15 per cent, or the account holder's marginal income tax rate less 15 per cent, whichever is greater.

There will be conditions on withdrawals.

The Government is seeking comments and submissions by 7 March 2008 to assist in settling the final administrative and legislative features of First Home Saver Accounts.