It is being reported that the FHSA is being abolished:
http://moneysaverhq.heraldsun.com.au/budget-tip/property-buy…
I'm not one to trust the Herald Sun at face value and haven't been able to find any other reporting of this. Can anyone verify this?
First Home Saver Account Abolished?
Lstonemaccas on 02/03/2014 - 22:08
Comments
"has been earmarked for the scrap heap"
Sounds pretty close to being abolished to me.
Potentially they could close it to new people, but presumably they would have to allow existing people to keep their accounts. (Whether they would continue to pay bonuses is another thing.)
With the restrictions they placed on it I'm not surprised. Nearly no-one used it - and the government KNEW that would happen - because just before they brought it out, they sent out an online survey which I took part in. They listened to virtually none of the suggestions anyone gave (and it was all basically the same criticisms). So why they even bothered with the survey, who knows. Village idiots with too much taxpayer money to throw away.
They have made some changes though, namely that you can use your money to go to your mortgage if you buy a house within the 4 year timeframe - but I still think that having a minimum timeframe wasn't too onerous. It's called a SAVER account, not an overnight account!
My bug-bear is the misely interest the banks provide in these accounts, eg 3.25% compared to other accounts eg Ubank ultra 4.62%. I know there's tax benefits in the accounts as well, but seriously!
You also need to take into consideration that the government also top up your account with 17% co-contribution per financial year up to a maximum $1,020. This is on top of the 3.25% interest you earn also the 15% tax rate that you pay.
Miserly interest?
IMB has 3.82% pre, 3.25% post while Police Bank has 4.15% pre, 3.53% post. Pretty good considering UBank 4.62% is pre and gets taxed @ your marginal rates plus Medicare, while FHSA interest is final taxed @ 15%. You'd find that after tax (or post), FHSAs earn slightly more interest (depending on tax rates of 32.5% and above).
Can anyone join those organisations you mentioned?
I'm not saying the total return isn't good with the 17% government payment, my point is, it's a bonus that shouldn't matter to the bank. If they're paying higher amounts on other savings accounts, they're just stooging first home saver account holders.
Yup.
If you want to join IMB, it's best to phone them up first. They'll send you a package of forms to sign and return post back to them (including standard forms such as identity proof, FHSA new account forms, FHSA account transfer forms etc).
If you want to join the Police Bank, go to their website and complete the forms listed (3 forms to complete, 4 forms to complete if transferring existing FHSA to Police Bank).
I think the reason why the interest they're paying is lower than let's say Ubank is because banks have factored in the lower tax you are paying. As lecoupdegrace said IMB's rate is 3.25% post tax. With Ubank's 4.62% if you assume a tax rates of 32.5% plus medicare levy, you're looking at a rate of 3.05% post tax.
Kind of looks like Police Bank is for Police and associated services only. Although - it does say 'relatives/families/friends. Are you police, or are you claiming you've got a police friend? Do they check.. you know, we are dealing with police after all!
Who can join?
Membership in the Police Bank is open to employees and their relatives/families/friends of the NSW Police Force,
the Australian Federal Police, Emergency Management, Corrective Services, Courts or any other area of law >enforcement and associated services. Call 131 728 if you have a question regarding joining Police Bank.Best to phone up Police Bank.
They rep that I talked to said it was no issue (i.e. I wasn't working for the police force nor related in any way to anyone that was).
The only concern that they had was that you need to guarantee a $10.00 fee in case the Police Bank ever gets wound up.
Cheers bud. The interest rate definately warrants (no pun intended!) a call to check it out. Credit unions normally charge a fee like $10 or so to join them as an 'owner' so that's normal.
Just one question out of topic..
Can we use FHSAs money as a house deposit money?
Thank you.
That's actually the purpose of FHSA. To help you save deposit for your first house.
thanks
I got one just to make risk free returns that I could then throw into super.
Thanks to all the taxpayers out there for the $4000. I'm grateful for small favours.
I've got my mum onto that. The family home was only in dads name, so she isn't a homeowner, and not likely to be, but some more bonus super money is lovely thanks!
Did you actually read the article? No where does it say that the FHSA will be abolished.