Designed by the Australian Government to make it easier for people to save a home-loan deposit and launched on October 1, the accounts provide a combination of concessional tax on interest earned and a Government contribution.
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Conditions have to be met before an individual can open an account. Customers must be aged between 18 and 65 and be first-time home buyers.
To qualify for the concessions, the customer must make personal after-tax contributions (deposits cannot be made by salary sacrifice) of at least $1000 a year over four financial years. However, they do not need to be consecutive years.
Account balances are capped at $75,000 (that amount will be indexed). A customer can operate only one account at a time.
Interest earned on account balances will be taxed at 15 per cent (interest earnings are usually taxed at marginal rates). The tax will be paid by the account provider and not the customer.
The Government will contribute 17 per cent on the first $5000 deposited each year over four years, meaning account-holders can qualify for up to $3400 from the Government.
Withdrawals are tax free and can be made for one of two purposes: to buy or build a first home in which to live; or to transfer into a superannuation fund if, due to circumstances, a home is not going to be bought.
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