First home saver accounts (FHSA)

Providing you are eligible, the Government will contribute a certain percentage/amount into the FHSA.

It is possible to receive a tax-free amount of up to $850 in 2008/09. This is calculated at the rate of 17% of contributions, of up to $5,000, made to the FHSA.

Contributions of at least $1,000 must be made for four financial years (not necessarily consecutive) before the money can be withdrawn. Other people can also contribute to the account.

Earnings on FHSAs are only taxed at 15% and the account provider (bank) is liable to pay it.

If you decide not to go ahead with buying or building your first home, the funds deposited to the FHSA must be contributed into your superannuation fund.

You are still entitled to apply for a First Home Owners Grant if you decide to open an FHSA.

Eligibility

To open a FHSA you need to:

	be aged over 18 and under 65 years
	have a tax file number
	have never owned a home in Australia that has been your main residence
	have never previously had a first home saver account.

Published : 18 September 2008