First Home Saver Account Providers

Ever since the federal government introduced the First Home Saver Accounts (FHSA) program, there has been a general optimism in the people. This new measure taken up by government to address the rising housing problems in Australia has been received well in all sections and the subsequent changes in its laws have helped to make this program more people-friendly.

Account providers and their types:

Once an account holder opens up a FHSA account, it becomes easy for the account provider to administer the individual. It is the obligation of the account provider to ensure that the applicant is eligible for opening such an account. After they have gathered all necessary information in this regard and are satisfied that the applicant is really eligible, they can open an account for such an applicant. The providers are required to report this to the ATO in the electronic form. This will help the provider to make sure that there is no fraud in the reports submitted by the individual and that his or her intentions are purely to purchase or build a house to live in.

There are no specific restrictions as to who can make a contribution to the FHSA though the contributions will be limited to $10,000 (indexed) per annum. This amount excludes the amount of contribution received from the government and earnings account. There could be a variety of providers like:

Ø       Public-offer superannuation providers

Ø       Friendly societies

Ø       Banks

Ø       Building societies

Ø       Life insurers

Ø       Credit unions etc.

Amongst these, you can expect deposit accounts from banks, building societies and credit unions. For investment linked accounts, you can move to the superannuation providers, life insurers and friendly societies. If you choose to get an FHSA from public offer licensees, then make sure that they provide you such account through a separate trust that has been authorised by the APRA. You cannot expect such accounts to be opened by any other providers because they do not have the kind of prudential regulation required for opening of such an account.

The government taxes these public offer licensees on their FHSA business in the same way as they are being taxed for their superannuation earnings. The tax rate is statutorily fixed at 15%. Similarly the life insurers and friendly societies will also be taxed on their FHSA business. None of them are required to segregate their FHSA business from their other business activities. Such taxation will take into account any deductions, tax offsets, capital gain tax discount and refundable imputation credits as well. The FHSA business of banks, buildings societies and credit unions will be taxed at 15% like any other retirement savings account. Though they also do not need to segregate their FHSA activities from the other business, they will not be allowed to benefit from tax offsets or capital gains tax discount.

All account providers are statutorily required to report annually to the ATO on the amount of contributions made to each account without fail. The onus of providing this housing benefit to the right person lies on the providers as well and they need to take ample steps to ensure there is no fraud taking place at any level.