CRA Publications

First Home Savings Account

The first home savings account (FSHA) is a qualifying arrangement between a holder and an issuer that is registered with the Canada Revenue Agency (CRA). Its main purpose is to give prospective first-time home buyers the ability to save for a down payment on a tax-free basis.

Some key features of the FHSA include:

• holders can contribute or transfer in from their registered retirement savings plan (RRSP) up to $8,000 per year

• the lifetime contribution and transfer in limit is $40,000

• holders can carry forward unused portions of their FHSA participation room  up to a maximum of $8,000

• contributions are tax-deductible

• withdrawals used to purchase a qualifying home  are non-taxable

• holders can have more than one FHSA

  • subject to the FHSA participation room and lifetime FHSA limits

  • the maximum participation period starts when they open their first FHSA

Who can offer FHSAs

A financial institution (known as an issuer) must receive approval from the Canada Revenue Agency (CRA) before it can offer first home savings accounts (FHSAs) to their clients.

An issuer is:

• a company licensed to carry on an annuities business in Canada (such as an insurance company)

• a Canadian trust company

• a depositary, which is:

  • a member, or a person eligible to become a member, of the Canadian Payments Association

  • a credit union that is a shareholder or member of a body corporate referred to as a “central” for the purposes of the Canadian Payments Act

The issuer is responsible for administering FHSAs, although they may transfer some administrative duties to another financial institution (known as an agent). To do so, the issuer must send the CRA a letter that authorizes that agent to administer FHSAs on their behalf.

Create an FHSA application package

Before an issuer can offer FHSAs to the public, they must submit their FHSA application package to the Registered Plans Directorate for approval. The Directorate will review the package to make sure that it is complete and complies with CRA and Income Tax Act requirements.

An application package includes:

• Form RC226, Application for an FHSA Identification Number

• FHSA specimen plan

• Holder application form

For more information, read CRA publication from this link FHSA application package - Canada.ca