What Is The First Home Savings Account（FHSA）？
Overview of FHSA
Purpose: Helps first-time homebuyers save up to $40,000 tax-free for their home purchase.
Tax Benefits: Contributions are tax-deductible, and withdrawals for buying or building a first home are tax-free. Unused funds can be transferred to an RRSP or RRIF without tax implications.
FHSA Rules and Eligibility
Requirements: Must be a resident Canadian, at least 18 years old, and not have owned real property in the last four years.
Contribution Limits: $8,000 annually, with a lifetime limit of $40,000. Excess contributions are subject to a 1% tax per month.
Opening and Managing an FHSA
Opening an FHSA: Available at most major banks and other financial institutions.
Types of FHSAs: Includes depository accounts, insured FHSAs, and trusteed FHSAs. Savvy investors can opt for a self-directed FHSA.
Closing an FHSA: Recommended before the maximum participation period ends to avoid unintended tax consequences.
Withdrawals from FHSA
Qualifying Withdrawals: Tax-free if used to buy or build a first home under specified conditions.
Taxable Withdrawals: Non-qualifying withdrawals are taxable but can be credited against taxes owed.
Designated Withdrawals: Allow for the removal of excess contributions without being taxed as income.
Investment Options and Alternatives
Investment Vehicles: Similar to RRSPs, including cash, GICs, bonds, mutual funds, and public securities.
Non-Purchase Options: Funds not used for home purchase can be transferred to an RRSP or RRIF or withdrawn on a taxable basis.
Other Canadian Home Buyer Incentives
Comparison with Other Programs: Details on the Home Buyer’s Plan (HBP) and the First-Time Home Buyer Incentive, including the possibility of using FHSA in conjunction with these programs for additional benefits.
This analysis encapsulates the FHSA's intent, operational rules, benefits, and its interplay with other Canadian home-buying incentives, providing a comprehensive guide for potential first-time homebuyers.
Government of Canada extends deadline for homeowners to file their Underused Housing Tax return
From: Canada Revenue Agency
October 31, 2023/Ottawa, Ontario
The Minister of National Revenue announces that owners affected by the Underused Housing Tax (UHT) will have until April 30, 2024, to file their returns for the 2022 calendar year without being charged penalties or interest.
This transitional relief will allow more affected owners to meet their obligations under this new law, which is part of the Government’s long-term plan to increase available housing for Canadians. Consequently, the Canada Revenue Agency will waive the application of penalties and interest for any late-filed UHT returns and for any late-paid UHT payable for the 2022 calendar year, provided the return is filed and the UHT is paid by April 30, 2024.
"The Underused Housing Tax is one part of our plan to combat the housing shortage,” says the Honourable Marie-Claude Bibeau, Minister of National Revenue. “We understand that many homeowners may not be aware that they are subject to this new law. This is why I want to ensure that every effort has been made to inform homeowners and help them meet their obligations.”
The UHT is an annual 1% tax on the ownership of vacant or underused housing in Canada. It is a federal tax that is independent of other provincial and municipal taxes on vacant or underused housing in Canada. It generally applies to foreign national owners of Canadian residential property, but it’s important to note that some Canadian individuals (namely those who own residential property as a partner of a partnership or as a trustee of a trust) and some Canadian corporations may also have to file a UHT return, even if they qualify for an exemption from paying the tax. These owners are referred to as “affected owners”.
The vast majority of Canadian individuals who own residential property are excluded owners and, therefore, do not have to file a UHT return or pay the tax. It is the duty of the owner of Canadian residential property to determine if they are an affected or excluded owner.
How to determine if you are an “affected owner”
The CRA has published a new online self-assessment tool. This tool helps you to find information you need to determine if you:
Need to file a return and pay the tax; or
Need to file the return but not pay the tax because you may qualify for an exemption from paying the UHT; or
Do not have to file a UHT return or pay the tax because you are an excluded owner.
If you’re an affected owner of residential property in Canada, you must file a separate UHT return by April 30, 2024, for each property you owned on December 31 of the 2022 and 2023 calendar years to avoid penalties and interest.
Filing the Underused Housing Tax return
If you are not registered for the CRA’s online portals, you can file your UHT return electronically, but you will need:
one of the following valid CRA tax identifier numbers:
social insurance number
individual tax number
business number, and
A digital access code
You can also file your return by mail or fax. Visit our File the return page to find out more.
To learn more about the Underused Housing Tax, visit canada.ca/cra-uht.
For more information that can save you time, we encourage you to visit UHTN15, Questions and Answers on the Underused Housing Tax - Canada.ca.
RRSP Contribution Limit for 2023/2024/2025
The RRSP contribution limit for the 2023 taxation year is 18% of the earned income you reported on your tax return in the previous year, with a maximum cap of $30,780.
For the 2024 taxation year, the RRSP contribution limit will increase to a maximum of $31,560, and for the 2025 taxation year, it will be $32,490.
Any unused RRSP contribution room can be carried forward for use in subsequent years, up until the age of 71, after which you are no longer eligible to maintain an RRSP account.
Contributions made during the first 60 days of 2024 can be claimed as deductions from income for the 2023 taxation year. The deadline for 2023 contributions is Thursday, February 29, 2024.
Any RRSP contributions received after February 29, 2024, will not qualify for deduction in the 2023 taxation year.