The Treasurer has released for public consultation an exposure draft of legislation that will increase the flexibility of First Home Saver Accounts.
If passed it will allow savings in a First Home Saver Account to be paid into an approved mortgage after the end of a minimum qualifying period, rather than requiring it to be paid to a superannuation account, if a home is purchased prior to the minimum release conditions being met.
Generally, a First Home Saver Account holder would need to keep their savings in a First Home Saver Account for four financial years before they are able to use those savings to buy a home. Under the existing legislation, if the account holder buys a home prior to meeting the minimum release conditions, the balance of their Account must be transferred to their superannuation so that it remains in a concessionally taxed environment.
First Home Saver Account interest earnings are taxed at 15 per cent and withdrawals are tax free where they are used to purchase a first home.
The changes will apply to houses purchased after Royal Assent of the amending legislation.
The new rules will apply to houses purchased after Royal Assent. However, they will apply to savings in First Home Saver Accounts opened before Royal Assent.