Is any financial institution still offering First Home Saver Accounts?
Those who received every co-contribution from 2008 just had a windfall with the new budget.
I'd like a ~20 % return on $6000 for a year.
Where can I still open a new First Home Saver Account?
Scrooge McDuck on 15/05/2014 - 14:27
Comments
Yes "ideally".
But mistakes happen and allowances are made. ;)
I'd love to see the number of accounts which were opened in the last week and who they are attributed to(and if they have political links).
Close enough to insider trading??
I was thinking this myself.
Good return for one year, but if u look at those accounts, banks give u much much lower interest rates for the rest of the life of the account.
The banks were the main winner from that scheme, not the savers.
Ps: spoken by someone who owns an account, and did the analysis.
I don't understand, there was a maximum yearly contribution of 6k (used to be $5,000 then $5,500) and a total cap of $90,000 on the account. So say you opened an account in 2008 when it was first introduced and deposited the maximum each year it would still be a pretty good investment. Granted the interest rate isn't that flash but my ME bank FHSA is only .75% less than UBanks current rate.
The point of this account was to boost your savings for 4 financial years in order to buy your first home, not to keep the funds in there for the rest of your life.
For those who have an existing FHS account before 7:30pm Tuesday 13 May, your contributions for FY13-14 will still attract the 17% interest from the Government. You will not get the bonus interest rate on years following this, just the bank's regular interest rate.
If you have this account with ME Bank, I know you can withdraw your funds into a normal bank account from 1 July 2015, and not be tied to depositing it to your mortgage or your superannuation. This is obviously presuming you haven't settled on your first residential property on or before 13 May 2014.
Darn, I've been considering opening one for 3 years but kept stopping myself because I worried we might not choose to buy in Australia and I didn't want to save just to put it in Super. So it turns out I could of opened the account built up the money and because it is being withdrawn I could of take it back on the 1st of July 2015 for whatever purpose I wanted.
Damn Hindsight!
You all should've just opened one anyway and held off depositing :P in hindsight that is. don't think they'd close it if no deposits weren't madE?
Really? Where did you read that?
nvm, found it:-
http://mebank.com.au/about-us/resources/first-home-saver-acc…
Presumably, they will pay the contribution this year and then nothing after that? But people can withdraw the money and spend as they see fit.
Oh well, that means I got $2,000 for investing $6,000.00 for two years and $6,000 for one year. Not bad.
Cloudy - I don't know who did the analysis, but they clearly didn't do it very well.
Tell me a bank account that gives you a) 17% return in a year PLUS b) interest on your savings, which are taxed at 15%, not 30%+ for many of us.
Also - the interest on the bank accounts were high, and just as high as some bank accounts back in the pre 4.5% days ( not too long ago, before rates were cut). If anything I remember ME and ANZ bank - switching between the two to take up their interest rates. They weren't bad.
Add in the concessionary rate the interest is taxed in PLUS an instant 17% return on contributions - I don't know how you could do the analysis and still come up negative?
In other words - you would have gotten easily over 20% pa return on your money. That beats any long term compounding return on shares and property. I'm surprise more people didn't take the foresight to open one. In the end the takeup didn't hit 750,000 accounts, only 45,000 accounts as the majority of the population unfortunately do not have the saving willpower to lock away funds for so long. It's just a generational/mentality thing unfortunately, not many have the patience and discipline to make a decision for 5 years time.
Not quite…. These are a good account and I do have one but they don't earn 20%pa. Sure you earn 20% in the first year but then only ~3% each year after that. This does NOT equal 20% pa.
Assume you deposited $1000 into the account July 1 four years ago and the interest rate is constant at 5% per annum (optimistic!) credited yearly.
July 1 4 years ago
$1000
July 1 3 years ago
$1000 + $170 gov contribution + $50 interest
=$1220
July 1 2 years ago
$1220 + $61 interest
=$1281
July 1 1 year ago
$1281 + $64 interest
=$1345
July 1 2014
$1445 + $67 interest
=$1412Annualised that is a total return of 9% per annum on money that you have locked up for 4 years. To give a comparison the ASX200 has returned closer to 13% pa over the last 5 years.
Well 412 = 41.2% on the original 1k. 8.24% on a straight line basis over 5 years. Remember this is risk free. the ASX 200 has returned 13% pa, but the risk is alot higher. Not only that - you have to pick the index to get that returns. Individual stocks are alot different, returns wise it could be alot higher or less. And again with risk.
Damn, i was going to open one of these accounts this year…
So what's the deal, it no longer exists, or it is no longer attractive?As per posts above it no longer exists - you can't open one from budget night onwards.
You sure about that? I don't think that is quite true.
Firstly I'm not sure the budget announcement said that FHSA no longer exist, more that government concessions and contributions will not be available to those who open an account after 13th May 2014.
Secondly the legislation still has to be changed, I assume that would need to get through the senate. The legislation is available here: http://www.comlaw.gov.au/Details/C2011C00397, does it allow government to cancel contribution obligations at any time? Any law experts want to comment on what they can and can't do?
Here is a summary. This scheme as with many others also including superannuation can and will be changed due to change of Government policies or colour of ties. Many times there are grandfathering arrangements and in this case stops at the end of this tax year.
Note 3.8 First Home Saver Accounts abolishedEffective Date: various from 13 May 2014
The Government intends to abolish the First Home Saver Accounts (FHSAs) scheme due to lower than expected take-up rates.
New accounts opened after 13 May 2014 will not be eligible for concessions
Existing account holders will continue to receive the Government co-contribution and all tax and social security concessions associated with these accounts for the 2013-14 income year
From 1 July 2015, FHSAs will be treated like any other account held with the provider and account holders will be able to withdraw their balance without restriction.
Good luck for those who were quick enough and also saw thread.
https://www.ozbargain.com.au/node/141194.Pretty sure I saw members equity site or somewhere say they weren't processing new accounts until it was clear. Also if concessions and contributions aren't paid after 13 may 2014, even if you COULD open one, why on earth would you?
You might get 1 years of concessions, but the main crux is you wouldn't get the government co-contribution.
I'm pretty sure when budget came out it mentioned something about not being able to open new accounts from budget night onwards, or perhaps that was as you said, just a cutoff for no co-contributions.
Sure the legislation COULD be defeated, but i doubt anyone will care enough to oppose it compared to other more 'popular' policies. Just not enough account holders to cause any politician to take note.
That said still totally nonsensical how if this 'hasn't aided housing affordability', how has it caused an adverse effect? none I assume…
From policebank correspondence
In regards to the FHSA account it’s has been Abolish as of the 14/05/2014, below are ore details
The Federal Government has announced in the 2014-2015 budget changes to abolish the first home savers account scheme.
The changes are as follows:
· As of last night any new accounts opened will not be able to access any concessions or government contribution· Eligibility for a government contribution will cease from 1 July 2014
· Existing account holders will continue to receive the government contribution for personal contributions made during the 2013-2014 financial year (ends 30 June 2014)
· Restrictions on withdrawals will be removed from 1 July 2015. From this date these accounts will be treated as a normal savings account.
As a result of these changes, effective immediately Police Bank will no longer offer first home saver accounts.
Too late, quoted from the ATO website
"New accounts created in respect of applications made from 7.30pm, Tuesday 13 May 2014 will not be able to access any concessions or the government contribution."
Source: https://www.ato.gov.au/general/new-legislation/in-detail/direct-taxes/income-tax-for-individuals/abolition-of-the-first-home-saver-accounts-(fhsa)-scheme