What is the Tax-Free First Home Savings Account (FHSA)?
On April 1, 2023, the Canadian Government introduced the new Tax-Free First Home Savings Account (FHSA). It will allow first time home buyers to save up to $40,000 per person towards their first home. The FHSA doesn’t replace the RRSP Home Buyers Program (HBP). It can be used on its own or in combination with the RRSP HBP.
How does FHSA compare?
The new account is a hybrid between a Registered Retirement Savings Plan (RRSP) and a Tax-Free Savings Account (TFSA). Individuals benefit from:
- tax deductions on contributions to the product,
- investments grow tax-free, and
- withdrawals used to buy their first home are not subject to tax.
Canadians get to contribute $8,000 annually with a lifetime maximum of $40,000.
Here's a high-level overview chart of how the FHSA, RRSP and TFSA compare.
Will Sun Life be offering a First Home Savings Account (FHSA)?
At Sun Life, we are always evaluating our product suite and how to best meet our Clients’ needs. We are actively looking at the new FHSA, evaluating its potential to help Clients, as well as their interest.
We know that plan sponsors want more holistic plan designs to make them relevant to employees of all ages. We want to offer the FHSA in a way that allows as many group members as possible to access this new savings product in a sustainable framework for all.
If we decide to move forward with this product, it will not be available before mid-2024.
Why is it important?
The FHSA is another savings product to help home buyers with the purchase of their first home.
- It helps Canadians save for goals other than retirement;
- It aligns with younger generations to help build and create savings patterns.
Want to learn more about FHSA?
Visit our general information page.
Questions?
Contact your Sun Life Group Retirement Services representative.