First Home Saver Accounts abolished

The Australian government is abolishing the first home saver account scheme, citing lower than forecast take-up rates. New accounts opened from Budget night will not be eligible for concessions.

Government co-contributions will cease from July 1, and tax concessions and asset and income test exemptions for government benefits associated with these accounts will cease from July 1, 2015. The saving to the Budget is estimated to be A$113.3 million.

First home saver accounts were introduced in 2008. Under the scheme, first-home buyers qualified for concessional tax treatment and government contributions of 17 per cent on the first $5,500 deposited each year if they contributed to their FHSA over four financial years.

Only 46,000 of the accounts were ever opened, with a total balance of $521.5 million.

Source: Banking Day