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Thursday, 15 May 2008

First Home Saver Account – A case study
With the recent Federal Budget changes to the First Home Saver scheme personal contributions of up to $5,000 will be rewarded with a flat 17% government contribution, regardless of marginal tax rates.

Example 1 – First Home Saver after Budget changes
On 1 October 2008, Belinda and Josh each open their own First Home Saver Accounts.

They both earn average wages of $61,000 and save 10 per cent of their salary to their individual accounts. Each receives a 17 per cent Government contribution on the first $5,000 of contributions made to their accounts each year.

After five years, Belinda and Josh will together have saved a deposit of around $88,500 to buy their first home.
This compares to a house deposit of around $75,900 if Belinda and Josh had saved using a term deposit with the same 7 per cent earnings rate and the same contributions.

Belinda and Josh will benefit from using First Home Saver Accounts by around $12,600 after 5 years.*

Example 2
Ria is aged 19 as at 1 October 2008 and is studying full time. She opens an account to kick-start her savings for her first home and contributes $1,000 from her part-time job. The Government contributes $170 per annum to support Ria’s savings.

After four years, Ria graduates from university and commences working full time. She increases her personal contributions to $5,000 per annum which increases the amount of the Government contribution she receives.

Ria is projected to have a home deposit of $50,400 when she decides to purchase her first home at age 29.*

*Source: First Home Saver Accounts - Outcomes of Consultation - 13/05/2008