New First Home Savings Account (FHSA)

Federal government has just recently proposed a new tax-free plan to assist Canadians trying to enter the housing market set to start in 2023.

Canadians looking to purchase their very first home now have a new option to save, and while at same time receiving a break from taxes.

Who can open an account? What are the limits?

This applies to all Canadian residents, who are 18 or older and who have not owned a home in the year the account was opened or the last four years.

The annual tax-deductible contribution limit is $8,000 all the way to a lifetime contribution maximum of $40,000. Any unused contribution will not carry forward and the plan will be closed after 15 years.

All funds taken out of the account for purchase of a home will not be taxed. All funds that are left unused can be transferred to a RRSP or a RRIF account, with no penalty and get a tax deferral. This will have no impact on the taxpayer’s contribution room. Funds taken out from your FHSA for any other purpose then purchasing your first home will be taxable.

On the other side, funds being held in an RRSP can be transferred to a FHSA but will have the same contribution limit as the FHSA. Taxpayer will not receive any additional tax deduction by doing this, but this can allow for tax-free withdrawal.

In order to learn further click here.

We are an CPA – Chartered Professional Accountant firm that can help file your Taxes, HST Returns and provide CRA Tax Audits.

For more information, you may contact one of our tax experts at SJ Chartered Accountants serving Mississauga, Etobicoke, Toronto & surrounding GTA area.