The First Home Super Saver Scheme (FHSSS) introduced as part of the 2017 federal budget could potentially provide a welcome avenue for third parties to assist in the purchase of a residence for younger family members, a technical expert has said.
“For me the major point to come out of this is often we’ll see parents or grandparents say how can I help out my children or my grandchildren towards the purchase of a first home, and how can I set aside some money for them in the hope that they will do the right thing with it and apply it to the purchase of that property and not take it and spend it on a holiday or something else,” BT Financial Group head of financial literacy and advocacy Bryan Ashenden told delegates at the recent Accounting Business Expo in Sydney.
“For parents or grandparents who are thinking that is something I might want to do, this might be something they can consider.
“Let’s put the money into the superannuation environment knowing it can only come out early toward the purchase of the first home.”
Ashenden pointed out even if the child or grandchild did not use the money to purchase their first home, the added benefit to the strategy would be an amount of money that will boost the recipient’s retirement savings.
Since the announcement of the FHSSS, speculation has arisen as to the administrative complexity of it, but Ashenden told the audience they need not be concerned about this aspect.
“The significant benefit out of this is super funds don’t have to worry about it. The ATO will actually administer this whole regime,” he noted.
“It actually works in a similar way to how you get excess contributions out. The ATO gives you a release authority.
“Individuals will just apply to the ATO to get the money released. The ATO will calculate how much they have and then the ATO will give them the release authority to go to the fund.
“So super funds don’t have to administer anything around this specific measure.”
The FHSSS allows a maximum contribution of $30,000, to be made over a minimum period of two years, to be set aside for the purchase of an initial abode for superannuants.
The first withdrawals for this purpose will be permitted from 1 July 2018.