Just days after the Federal Treasurer, Scott Morrison released the detail of the Government’s First Home Super Saver Scheme, it has been shot down by a robo advice company as ‘broadly ineffectual’ and a ‘hospital pass’.
Morrison released Treasury’s detailed outline of the workings of the scheme on Friday, but according to the co-founder of robo advice company, cover.com.au. Harry Chemay, the scheme represents too little, too late.
“Given the state of the property market, imposing a limit of $30,000 (plus accrued earnings) on an individual hoping to accelerate their entry into the property market is really just cruelling their hopes,” Chemay said.
He claimed that, ideally first home buyers will save a 20 per cent deposit to avoid Lenders Mortgage Insurance and to have a reasonable equity buffer from day one. Depending on the type of property and city, that would require a deposit more in the $80,000 to $160,000 range.
“Given the reality facing first home buyers today, the FHSSS $30,000 contribution limit will be broadly ineffectual in helping young Australians share in the great Australian dream” Chemay said.
He also warned that the FHSSS scheme could represent a hospital pass for the Australian Taxation Office (ATO) which would be tasked with assessing concessional and non-concessional FHSSS contribution, the order they are received and making assessments of tax to be withheld or repaid.
“To say the process being considered for administration of the FHSSS is convoluted is to significantly understate just how complex it really is,” Chemay said.
