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.*