SG increase to impact first home super savers
The increase in the rate of SG may impact how much individuals can contribute under the First Home Super Saver Scheme, Colonial First State has explained.
Speaking in a recent podcast, Colonial First State senior manager of technical services Kim Guest said reminded advisers that under the First Home Super Saver Scheme, individuals can make eligible contributions up to $15,000 per year up to $50,000 in total.
“They can then have that amount released to help them pay for a deposit on their first home,” said Ms Guest.
“When you look at what makes up that $15,000 per year or $50,000 in total eligible contributions, it actually doesn't include SG. So you can't use SG to pay for your home deposit but it does include other types of concessional contributions such as salary sacrifice and personal deductible contributions.”
Ms Guest explained that if someone is contributing salary sacrifice amounts or personal deductible contributions up to the annual cap, the increase in SG means that there is less annual cap available and so the amount they can save towards their home deposit might be reduced.
However, if the individual has unused carry forward contributions, then they will have the opportunity to still be able to maintain those levels of contributions, she noted.
“So it will depend on whether they have any carry forward contributions available,” she said.
Ms Guest noted that most individuals using the First Home Super Saver Scheme would have a total super balance well below $500,000 and will therefore not have to worry about the TSB threshold for carry forward contributions.
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.