A significant change to the First Home Super Saver Scheme, which has an attractive deemed interest rate, was tucked away among a raft of changes to superannuation that took effect this month.
From July 1, the amount that can be withdrawn for a home purchase under the First Home Super Savers Scheme increased from A$30,000 to $50,000. The annual contribution limit that counts towards the FHSSS each financial year remains at $15,000.
Compulsory employer contributions cannot go towards the FHSSS, only additional voluntary contributions. Home buyers can release funds under the FHSSS if they are over 18, they have never owned property and if they have not used the scheme before.
Users of the scheme can withdraw a deemed rate of earnings on top of their contributions, using a “shortfall interest charge” set by the Australian Taxation Office and based on a margin over the 90-day bank bill rate.
The rate is set quarterly and the current rate, which applies from July to September, is 4 per cent. This is an increase from 3.07 per cent, which applied in the June quarter.
Other changes to superannuation rules that took effect on July 1 include an increase in the compulsory employer contribution rate, removal of the work test for older people, reduction in the downsizer eligibility age and a reduction in minimum pension payments.
The compulsory employer contribution rate has increased from 10 per cent to 10.5 per cent.
Under work test rules, people aged 67 to 74 have had to show they worked a set number of hours before making non-concessional super contributions. The work test has been removed.
Under the home downsizer rules, someone selling their house can contribute up to $300,000 of the sale proceeds to their superannuation account. If the dwelling is jointly owned, both people can make the contribution.
The scheme was designed to encourage older people to free up real estate by selling large family homes. The age at which people can access the scheme was lowered from 65 to 60 on July 1.
The 50 per cent reduction in the minimum superannuation pension drawdown, which was introduced in March 2020, has been extended to 30 June 2023.