The government announced the First Home Saver Scheme yesterday, which allows first home buyers to make contributions of $15,000 per annum and $30,000 in total within existing contribution caps to their superannuation funds to help them purchase their first homes.
AFA chief executive Philip Kewin welcomed the measure.
“Purchasing a home is an important step in wealth creation and the AFA congratulates the government on the establishment of the scheme and potentially making home ownership more achievable for more Australians,” Mr Kewin said.
“But this comes with quite a marked change in the required investment approach, with a ‘dual’ investment strategy of short-term funding for housing, and long-term funding for retirement.
“Understanding these principles and ensuring the right investment strategy is in place is critical and requires professional advice. These issues have again highlighted the need for professional financial advice to be tax deductible and the AFA will continue to call on the government to legislate this.”
SMSF Association chief executive John Maroney also welcomed the initiative, saying “it is important to note that only the extra voluntary contributions and associated earnings can be withdrawn, not a person’s compulsory super contributions made by their employer”.
“This scheme offers superannuation funds, including the SMSF sector, an excellent opportunity to engage younger fund members in their superannuation,” he said.
“The first home buyers’ proposal strikes the right balance between encouraging young people to save for a first home deposit in a concessional tax environment, but also protecting their retirement savings for the longer-term.”
FPA chief executive Dante De Gori said while the FPA supports initiatives to make housing more affordable, accessing super is not the solution to the affordability issue and is not in the national interest.
“Our members, who provide advice to millions of Australians, are concerned that changes that reduce retirement savings for future retirees, will only add extra pressure to the age pension,” he said.
This has positives and negatives. I can see this measure if anything will strengthen the bond between accountants and clients, given the advice from the accountant would more easily able to be claimed as a tax deduction and claimed at the time of their annual tax return. This type of advice will be more easily tacked onto a 15 minute tax return meeting in the form of tax advice. The relationship for life is then set with the client saying the accountant helped me with my first family home. The next step is a SMSF. Why would you go to an adviser and pay a non tax deductible SoA fee and not be able to claim it as a tax deduction. The last time I heard from a financial adviser they were too busy calling each other names and bagging each other out. On another point the implementation of this measure mostly likely will be recouped from all Australians super funds similar to the existing regulatory reform levy charged for Stronger Super measures .
Last Friday before the Budget, Peter Roan CFP and myself issued a media release in support of home buyer access to superannuation. We sent it to the Treasurer via email and social media. Property ownership and superannuation has always been part of a financial plan for financial freedom. Most clients want homeownership as soon as possible for peace of mind in the future. Access to superannuation for a deposit will help struggling families purchase a home. Families should not be punished because of immigration policy and foreign ownership which has caused skyrocketing home prices in Sydney and Melbourne and other cities around Australia. Well done to Scott Morrison for bringing superannuation into the realm of homeownership.
Given the lack of understanding of economic principles highlighted by this comment, one assumes yours and Peter’s CFP status was acquired via grandfathering?
I love how the old gen adviser wave the CFP around like it’s the pinicple of adviser education.
The path now requires, RG146, Advanced Diploma, Masters of FP and then CFP.
Is this the path you and Peter took, Julie? If so, hats off.
Perhaps it’s the reason why, because of those older generation of advisers that you’ve got a job today. I didn’t hear from you 20 years ago saying advice should be more professional, and lets form an association and pay useless fees, just so we can try and prevent over regulation. Yes I have a CFP, I have a Degree and Graduate degrees. My first job I was turned down because they (a bank) were preferring to employ people from Harvey Norman with sales skills. I’m pretty sure those same staff at Harvey Norman have better sales skills and are much better looking than yourself so lucky for you there are advisers like Julie Matheson CFP. So that advisers like you are now employed based on qualifications and not on their ability to sell a vacuum cleaner.
Easy to check this. Go to the FAR and see if they are legacies (no degree requirement at time of award).
I think they call guys like you two… trolls don’t they? Perhaps, using the CFP logo is a great way for great advisers to distinguish themselves from the many unlicensed advisers, accountants, Mr Google and mortgage brokers out their giving financial advice. Perhaps rather shouting down fellow “licensed advisers” who have committed to a code of placing the clients interest above themselves, you’d be better off praising them. I guess you’re pretty happy with the present system of the majority of Australians getting financial advice from accountants in a 15 minute tax return meeting. “”Would you like a SMSF with that tax return Mr Joe Bloe””. If you’re wondering why clients aren’t knocking down your door it’s because infighting and unprofessional comments like this.
Dante, you missed the point big time. If anything this measure is getting young people engaged with super earlier rather than thinking about it (and the half a dozen funds they have amassed) when they are 40. This will not erode super balances for these people as they are currently unlikely to be salary sacrificing to super if saving for a house. It has a created a new value proposition for your members if anything.
Phil, the rates of return for the purposes of withdrawing the funds is based on a deemed rate (90 day bank bill + 3%). As a result the asset allocation is not so important for the short term. Of course the actual earnings will be based on whatever the funds are invested in, so there is risk of a market downturn, and subsequent withdrawal of the contributed funds + deemed income withdrawing more than was actually contributed. However, over a person’s 40 year working life, I wouldn’t expect this is making a material difference to the end outcome. Have a ‘dual’ investment strategy is overcomplicating things.
The only downside I can see is to the super funds themselves who now need to deal to another round of system changes, costs & admin. These costs will ultimately be borne by the member and is what the professional associations should be concerned with. They should be lobbying for the Govt to subsidise part of this investment.