Housing affordability measures – Access to super for first home deposit
Individuals will be able to withdraw certain voluntary contributions made into superannuation to top up their deposit on their first home.
This measure encourages voluntary contributions by providing a tax benefit and may be appealing for young people who would not otherwise make additional contributions into super because it is inaccessible until retirement.
Individuals who are looking to purchase their first home will be able to access specific voluntary contributions made into superannuation after 1 July 2017. The voluntary contributions, and an amount of associated deemed earnings, will be accessible by individuals from 1 July 2018.
Limits apply to the amount that individuals can contribute under this measure to $15,000 per year and $30,000 in total. The existing contribution caps must be adhered to in conjunction with this initiative.
Withdrawals under this measure will be taxed at the individual’s marginal tax rate less a 30% tax offset.
While this measure may provide young Australian’s with an incentive to start, or continue saving for a home, the major tax benefit will be limited to those who sit outside of the lowest tax bracket.
In addition, we see a risk for those individuals who do not ultimately decide to purchase a home for some time, or decide to invest elsewhere. Given the vast changes to superannuation over the past number of years, there is concern that some people who would be eligible will be wary of committing to this scheme.