First home buyers are enthusiastically tapping into their superannuation thanks to a Federal Government scheme.
The scheme to allow first home buyers to access super was designed to improve housing affordability and they have so far tapped into more than $5 million.
The First Home Super Saver Scheme has been operating since July 1 and there has been a big uptake in those accessing the scheme.
The scheme works by allowing people to voluntarily add to their super contributions and then withdraw those contributions.
Due to the tax benefits of super – the low rate of 15 per cent – savings can build up at a quicker rate.
Withdrawals are capped at $15,000 a year and at $30,000 in total, while any earnings made on the money while in super can also be withdrawn and is totally uncapped.
Since the July 1 opening of the scheme through to August 6 this year, taxpayers have made 1449 requests to the Australian Tax Office to access the scheme and the ATO has gone on to authorise 498 of those for the release of $5.3 million.
Townsends Business and Corporate Lawyers special counsel Michael Hallinan said he was surprised by the big uptake of the scheme.
“This level of uptake in the first few months of operation is surprising for a couple of reasons,” he told Australian Financial Review.
“First, there would seem to have been too little time for a material amount of eligible contributions to have been made, and only one year’s worth of earnings accrued.”
“The second is that the scheme operates on a once-only access basis.”
“While an individual can make any number of requests for a determination, they can only make one request for a release authority.”
“If the authority is issued then the individual can no longer request another release authority even if they continue to make voluntary super contributions or did not use the released amount.”
The scheme was part of a suite of housing affordability measures brought in by the Federal Government in 2017.