Tax-Free First Home Savings Account

The First Home Savings Account (“FHSA”) was introduced in the 2022 Federal Budget to address the increasing difficulty Canadians are experiencing in buying a first home due to rising real estate values. The FHSA is intended to help Canadians save and fulfill their dreams of home ownership.

If you or a family member is planning to buy a house in the next 5 years, you’ll want to know about the newest “kid” on the registered plan block: the First Home Savings Account or FHSA.

These brand new accounts blend the features of both the TFSA and the RRSP but have some unique features of their own.

Want to learn more about it? Read what our colleagues at Wellington-Altus have to say about the FHSA.

What is a FHSA?

An FHSA is a new registered account that provides the opportunity for Canadians to save up to $40,000 on a tax-free basis to put towards purchasing their first home in Canada. It combines the benefits of tax-deductible contributions as with a Registered Retirement Savings Plan (“RRSP”) and tax-free withdrawals as with a Tax-Free Savings Account (“TFSA”). FHSAs will be available at Wellington-Altus starting in Fall, 2023.

 Who can open an FHSA? 

To open an FHSA, an individual must be: 

  1. Resident in Canada; 
  2. At least 18 years of age; and 
  3. A first-time home buyer (i.e., has not lived in a housing unit that they owned at any time in the calendar year the FHSA is opened or in the prior four calendar years). 

 Contributions to an FHSA 

 Like the RRSP, contributions to an FHSA are tax deductible, reducing the contributor’s taxable income. An individual: 

• Has an annual contribution limit of $8,000 per year. 

• Has a maximum lifetime contribution limit of $40,000. 

• May have multiple FHSA’s but must adhere to the contribution limits on a combined basis.

• Like other registered plans, a 1% penalty tax will apply on a monthly basis to contributions in excess of FHSA limits 

• Unlike other registered plans, the FHSA must be opened in order for contribution room to be calculated, it is not automatic 

 Contributions to an FHSA are deductible in the calendar year in which they are made, however contributions can be carried forward and deducted in a future year. As well, unused annual contribution room is carried forward and can be used in a subsequent year. 

 Other key FHSA contribution details:

• If funds are borrowed to contribute to an FHSA, the interest will not be deductible for income tax purposes. 

• FHSAs can only hold “qualified investments” which include publicly traded securities, mutual funds, GICs, and government and corporate bonds. 

• The legislation allows for amounts to be directly transferred from an individual’s RRSP to their FHSA within the annual and lifetime contribution limits. However, amounts transferred from an RRSP to fund the FHSA will not generate an additional tax deduction and reinstate RRSP contribution room. 

Withdrawals from an FHSA 

Like the TFSA, the FHSA allows the withdrawal of funds on a tax-free basis. To qualify, all of the following must be true: 

  1. The individual is a resident of Canada throughout the period between the withdrawal from the FHSA and the acquisition of the qualifying home. 
  2. A written agreement is in place to buy or build a home in Canada before October 1st of the year following the date of the withdrawal. 
  3. The individual intends to occupy the home as their principal residence within one year after buying or building it. 
  4. The withdrawal is made within 30 days of acquiring the qualifying home. 

Provided the individual meets the conditions mentioned above, the entire amount of available FHSA funds may be withdrawn tax-free in a single withdrawal or in a series of withdrawals. 

If amounts from an FHSA are withdrawn and not used to purchase a qualifying home, the amount of the withdrawal will be included in the income of the individual and taxed at their marginal rates. 

One notable aspect of the legislation is the ability for an individual to make use of both an FHSA withdrawal and a Home Buyers’ Plan withdrawal in respect of the same qualifying home purchase. The originally released draft legislation prevented the combination of these two programs on the same purchase. 

Closing or Winding-up an FHSA 

An individual’s FHSA will cease to be an FHSA on December 31st of the earliest of:

The 15th anniversary year of the individual first opening an FHSA;

The year the individual turns 71 years old; and

• The year following the year of a first qualifying withdrawal from an FHSA (as discussed above). 

Any savings not used to purchase a qualifying home can be transferred on a tax-free basis into a RRSP/ RRIF or withdrawn on a taxable basis. 

Example. A 30-year-old individual opens their first FHSA in 2023 and purchases their first home in 2029. All their FHSAs must be closed by the earlier of: 

• December 31, 2030 – the end of the year following the year of withdrawal; 

• December 31, 2038 – the end of the 15th anniversary year; or

• December 31, 2064 – the end of the year the individual turns 71.

The opinions contained herein are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Wellington-Altus Private Wealth. Assumptions, opinions and information constitute the author’s judgement as of the date this material and subject to change without notice. We do not warrant the completeness or accuracy of this material, and it should not be relied upon as such. Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Graphs and charts are used for illustrative purposes only and do not reflect future values or future performance of any investment. The information does not provide financial, legal, tax or investment advice. Particular investment, tax, or trading strategies should be evaluated relative to each individual’s objectives and risk tolerance. All third party products and services referred to or advertised in this presentation are sold by the company or organization named. While these products or services may serve as valuable aids to the independent investor, WAPW does not specifically endorse any of these products or services. The third party products and services referred to, or advertised in this presentation, are available as a convenience to its customers only, and WAPW is not liable for any claims, losses or damages however arising out of any purchase or use of third party products or services. All insurance products and services are offered by life licensed advisors of Wellington-Altus. Wellington-Altus Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. All trademarks are the property of their respective owners.

Amy Sweeney

AMY SWEENEY

Associate

Amy was born and raised in Squamish, is David’s oldest daughter and now the newest member of the Sweeney Bride team. Many may recognize her as she has worked periodically for the team for over 20 years. For the past five years, she has gained administrative experience and more running her own business as a Kinesiologist after completing a bachelor’s degree in Kinesiology at the University of British Columbia in 2016. Now, Amy is officially ready to join the finance industry. Currently residing in North Vancouver, Amy spends all her “free” time raising Dave’s two wonderful grandchildren.
Liam Hill

LIAM HILL

Associate Investment Advisor

Originally from Sydney, Australia, Liam moved to the Sea to Sky region in 2013, leaving the beaches behind to embrace the mountains. He hasn’t looked back since and enjoys exploring the wilderness by both land and sea.

Liam’s unique strength lies in his capacity to adapt and fine-tune strategies to match the ever-changing financial world. He’s a passionate advocate for adaptability and flexibility, believing these traits are crucial for securing financial well-being.

Liam holds the Canadian Securities Course qualification and is currently pursuing the Chartered Investment Manager (CIM) designation.

He shares his industry knowledge and business skills to empower individuals, families, and businesses on their path to financial success.

Liam is committed to educating our clients about the financial services industry and helping them make the most of available resources to achieve prosperity.

SHARON FIELDS

Administrative Assistant

Sharon worked for Sweeney Bride from 2014 to 2016 and recently rejoined the team as an Administrative Assistant in 2021. She has years of administrative experience in a variety of industries including working in legal and accounting firms. She enjoys being detailed, organized and efficient. When not hard at work, she enjoys exploring the great outdoors with her dogs, playing co-operative strategy board games and relaxing while sipping a nice Craft beer.

Carrie Freitag

CARRIE FREITAG

Administrative Assistant

Carrie is the newest member of our team and is our Administrative Assistant. She has previous industry and administrative experience and her fascination with the finance industry is rapidly growing. Carrie moved to BC in 1994 from Ontario and never looked back. While not working she loves hanging out with her two kids, awesome cat Leo, and enjoys a competitive game of 21, and her gardens.

Katie Norton

KATIE NORTON

Associate

Katie is a Business Administration graduate who joined the Sweeney Bride team in 2016. She takes care of on-boarding as well as managing account administration for our existing clients. She works hard to ensure the clients feel supported throughout the on-boarding process and is always available to answer questions.

A BC resident since 1997, Katie and her husband moved to Squamish to raise their two girls. They enjoy all of the outdoor activities and natural beauty that Squamish has to offer.

Liz Woodsworth

LIZ WOODSWORTH

Office Manager

Liz joined the Sweeney Bride team in 2015 as office manager. She is the gatekeeper in the office and is the face that greets you as you come through the door. If she can’t help you, she will ensure you speak with someone who can. Liz is a long-time Squamish local; when not in the office she spends her days soaking up all that this town has to offer while chasing her two active boys. Liz brings her valuable organizational skills and enthusiastic attitude to the team. 

Janet Bride

JANET BRIDE

CFP®, CIM® | Senior Wealth Advisor

Janet Bride is a Senior Wealth Advisor at Wellington-Altus Private Wealth and co-founder of the Sweeney Bride Strategic Wealth Advisory team.

With over 15 years’ experience in the Industry Janet holds the Chartered Investment Manager (CIM®), CERTIFIED FINANCIAL PLANNER®, and Elder Planning Counselor (EPC) designations and is also Insurance licensed.

Janet grew up in Ontario and moved out to beautiful British Columbia in 1995 with her husband, Paul, who is an adventure travel photographer. Her passion is to travel the world. Always interested in exploring different cultures and landscapes, she is grateful to have traveled to over 50 countries across 6 continents. She also enjoys continuous learning, spontaneous adventures with family and friends, and an active lifestyle in the Sea to Sky. Janet is proud to be a Big Brothers Big Sisters Alumni member since 2004.

She is highly motivated by helping people reach their financial dreams by creating comprehensive financial plans for individuals & families. While using a holistic approach to wealth management, she specializes in tax strategies and her goal is to encourage savings and help build our client’s wealth for a healthy and prosperous future.

David-Sweeney

DAVID SWEENEY

CFP®, CIM® | Senior Wealth Advisor

Dave Sweeney is a Senior Wealth Advisor at Wellington-Altus Private Wealth and co-founder of the Sweeney Bride Strategic Wealth Advisory team.

With over 31 years’ experience in the Industry Dave holds the Chartered Investment Manager (CIM®), CERTIFIED FINANCIAL PLANNER®, and Elder Planning Counselor (EPC) designations and is also Insurance licensed.

Dave has lived in Squamish for most of his life. Married to his wife Donna, since 1987, they proudly have 3 lovely daughters, Amy, Danielle and Jamie. With his time in Squamish, it has allowed him an opportunity to become involved in many valuable groups.

Dave is a retired Captain of Squamish Fire Rescue after 35 years of service. Another passion was sports and he has been a coach for Squamish Youth Soccer Association where he dedicated 10 years to coaching girls Rep teams. Additionally, he is a former member and Treasurer of the Sea to Sky Community Services Board. Dave is a frequent contributor to Mountain FM’s Mountain Monitor, providing general advice and financial commentary.

Dave continues his volunteer work as Treasurer for both the Squamish Hospital Foundation and the Squamish Downtown Business Improvement Association. He is also a sitting Board member of the Squamish Community Foundation.

Professionally, Dave started his Financial Planning practice in 1994. After living through both his parents’ demise and witnessing what a lack of understanding they had, he realized what sound planning techniques could do to ensure that an untimely death did not destroy one’s lifetime work. For over 20 years, he has made it his passion to assist others in not facing the same plight.