Tax deductions for FHSA contributions
Contributions that you make to your first home savings accounts (FHSAs) are generally deductible on your income tax and benefit return for the year of the contribution or a future year, similar to registered retirement savings plan (RRSP) contributions. It is important to note that transfers from your RRSPs to your FHSAs are not deductible.
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Contributions you can deduct in a year
The contribution period for your FHSAs is a calendar year (January to December).
2023: April 1 to December 31
However, for 2023, FHSAs can only be opened as of April 1, 2023. This means that if you opened an FHSA in 2023, you may be able to deduct contributions you made to your FHSAs between April 1, 2023 and December 31, 2023, on your 2023 income tax and benefit return.
There is no minimum number of days that contributions you make to your FHSAs need to stay in your FHSAs before you can deduct them on your income tax and benefit return.
For more information on FHSA contributions and how to make them, go to Participating in your FHSAs.
How much you can deduct
The contributions that you make to your FHSAs may be deductible on your income tax and benefit return for the year of the contribution or a future year.
Over your lifetime, the most you can deduct from your income as an FHSA deduction is $40,000. Transfers that you make from your RRSPs to your FHSAs will reduce the amount that can be deducted over your lifetime.
How to calculate your maximum deductible amount for the year
The maximum amount that you may deduct in respect of your FHSA contributions is the lesser of:
- The total of all your annual FHSA limits for the year and each prior year
- minus The total of all of your FHSA deductions for each prior year
- $40,000
- minus All amounts transferred from your RRSPs to your FHSAs for the year and each prior year
- minus All amounts transferred from your RRSPs to your FHSAs for the year and each prior year
If the results of this calculation is negative, use $0.
Under proposed legislative amendments, the FHSA deduction will be changed to reduce the amounts transferred from your RRSPs to your FHSAs for the year and each prior year by the amount of designated transfers in the year and each prior year.
These proposed rules will be in effect once they have received Royal Assent, and will be effective as of April 1, 2023.
A form to help you calculate your maximum deductible amount will be available at a later date.
You must fill out Schedule 15 - FHSA Contributions, Transfers and Activities when you file your income tax and benefit return for the year you opened your first FHSA to let us know that you opened an account, even if you did not contribute to your FHSAs or transfer property from your RRSPs to your FHSAs in the year.
For more information on how to complete your Schedule 15, go to Reporting FHSA activities on your income tax and benefit return.
After you have filed your income tax and benefit return and filled out Schedule 15 indicating that you have opened your first FHSA, the total of your unused FHSA contributions available to be deducted in a future year will be provided to you on your:
- latest notice of assessment
- latest notice of reassessment
- Form T1028, Your RRSP, HBP, LLP or FHSA information for 2024
If the CRA reassesses your 2023 income tax and benefit return, the revised total of your unused FHSA contributions available to be deducted in future years will appear on your notice of reassessment or, in some cases, on Form T1028.
If you do not have a copy of your notice of assessment or reassessment nor a Form T1028, you can find the total amount of your unused FHSA contributions available to be deducted by calling the individual tax enquiries line at 1-800-959-8281.
Example – Claiming an FHSA deduction
Chandler opened his first FHSA in April 2023 and contributed $5,000 to his account. Chandler heard that individuals who make contributions to their FHSA can claim deductions on their income tax and benefit return. However, Chandler was not sure how much he is allowed to claim as a deduction.
Chandler checked the Canada Revenue Agency (CRA) website to confirm how much he is allowed to claim as FHSA deductions when he files his 2023 income tax and benefit return.
Chandler found out that since 2023 was the first year that he opened an FHSA, he can claim an FHSA deduction for the total amount of the contributions that he made in 2023, or $8,000, whichever is less.
Since Chandler contributed $5,000 to his FHSA in 2023, he can claim an FHSA deduction of up to $5,000 when he files his 2023 income tax and benefit return.
Unused FHSA contributions
Generally, the amounts that you contributed to your FHSAs but could not or decided not to claim as an FHSA deduction on your income tax and benefit return can be carried forward, even beyond the closure of your FHSAs.
If you have an excess FHSA amount, the deductibility of your unused FHSA contributions that can be carried forward may be impacted. For more information, go to Deductions when you have an excess FHSA amount.
Example – Claiming unused FHSA contributions
Nagia opened an FHSA in August 2023. Nagia's FHSA participation room for 2023 was $8,000 as this was the first year that she opened an account. She contributed $8,000 in the same month. She did not make any other contributions or transfers for the rest of the year.
Nagia decided not to claim any of her FHSA contributions as a deduction when she filed her 2023 income tax and benefit return.
Nagia's 2023 notice of assessment showed that she had unused FHSA contributions of $8,000, which she can claim as a deduction for the 2024 tax year, in addition to any deductible contributions she made in 2024.
Nagia contributed $5,000 to her FHSA in 2024. She did not make any other contributions or transfers for the rest of the year.
Nagia decided to claim the maximum FHSA deduction available of $13,000 when she filed her 2024 income tax and benefit return.
- plus $8,000 (unused FHSA contributions from 2023)
- +plus $5,000 (FHSA contribution in 2024)
- =eqauls $13,000 (FHSA deduction available for 2024)
Amounts that cannot be deducted
Contributions that cannot be deducted for a previous year
You cannot deduct the following contributions on your income tax and benefit return for the previous year:
- Contributions you make to your FHSAs during the first 60 days of the year cannot be deducted on your income tax and benefit return for the previous year, unlike contributions to an RRSP.
Example – Contributions in the first 60 days of the year
Arlene opened her first FHSA in 2023. She did not make any contributions to her FHSA that year.
On January 15, 2024, Arlene decided to contribute $5,000 to her FHSA.
She wanted to claim her $5,000 contribution as an FHSA deduction on her 2023 income tax and benefit return, similar to her RRSP contributions.
Arlene checked the CRA web pages and found out that she was not allowed to do this.
Arlene is not permitted to claim any FHSA deductions on her 2023 income tax and benefit return because she did not make any contributions in 2023. Arlene will be permitted to deduct the $5,000 contribution on her income tax and benefit return for 2024 or a future year.
Contributions that cannot be deducted in any year
You cannot deduct the following contributions on your income tax and benefit return for any year:
- Contributions made after the first qualifying withdrawal cannot be deducted on your income tax and benefit return for any year.
Example – You may not deduct contributions after the first qualifying withdrawal
Clayton opened his first FHSA in 2023 and contributed $8,000 in each of 2023, 2024 and 2025. Clayton claimed an $8,000 FHSA deduction on his income tax and benefit return for 2023, 2024, and 2025.
Clayton filled out Form RC725, Request to Make a Qualifying Withdrawal from your FHSA and gave it to his financial institution in August 2026. The withdrawal was issued in the same month.
In December 2026, Clayton contributed $8,000 to his FHSA.
Since Clayton made his first qualifying withdrawal in August 2026, he cannot claim his $8,000 contribution from December 2026 as an FHSA deduction on his income tax and benefit return for 2026 or for any subsequent year.
- An excess FHSA amount you designate as a withdrawal cannot be deducted on your income tax and benefit return for any year.
Example – You may not deduct any excess FHSA amount you designate as a withdrawal
Stephanie opens her first FHSA in July 2023. Stephanie's FHSA participation room in 2023 is $8,000 because this is the first year she opened an FHSA.
Stephanie contributes $11,000 to her FHSA on August 31, 2023.
On October 5, 2023, Stephanie realizes that she has an excess FHSA amount of $3,000.
- minus $8,000 (FHSA participation room for 2023)
- -minus $11,000 (FHSA contributions in 2023)
- =eqauls - $3,000 (a negative amount means you have an excess FHSA amount)
Stephanie will have to pay a tax of 1% on the highest excess FHSA amount in the month for each month until the excess FHSA amount is eliminated. For more information on excess FHSA amounts and how to remove them, go to What happens if you contribute or transfer too much to your FHSA.
On October 6, 2023, Stephanie fills out Form RC727 Designate an Excess FHSA Amount as a Withdrawal from your FHSA or as a Transfer to your RRSP or RRIF to complete a designated withdrawal of $3,000 to remove her excess FHSA amount and gives it to her financial institution. The designated withdrawal is completed on the same day.
Stephanie claims an FHSA deduction of $8,000 when she files her income tax and benefit return for 2023. She also files a return to report and pay the tax on her excess FHSA amount.
Stephanie does not make any contributions to her FHSA or transfers from her RRSPs to her FHSAs in 2024.
Stephanie checks the CRA website to check if she can claim the $3,000 contribution that she previously designated as a withdrawal as an FHSA deduction when she files her 2024 income tax and benefit return.
Stephanie finds out that she cannot deduct on her income tax and benefit return any excess FHSA amounts that she previously designated or will designate as a withdrawal. As a result, Stephanie cannot use the $3,000 excess contributions that she previously designated as a withdrawal as a deduction when she files her 2024 or any other income tax and benefit returns.
- Any contributions to your FHSAs that exceed your lifetime FHSA limit of $40,000 cannot be deducted on your income tax and benefit return for any year.
Example – Deductions after contributing more than the lifetime FHSA limit
Wesley opened an FHSA in 2023 and made contributions of $8,000 in each of the years 2023 to 2027. As of December 31, 2027, Wesley contributed a total of $40,000 to his FHSA and did not have an excess FHSA amount. On February 1, 2028, Wesley contributed an additional $5,000 to his FHSA, resulting in an excess FHSA amount of $5,000.
| Year of contribution | Amount |
|---|---|
| 2023 | $8,000 |
| 2024 | $8,000 |
| 2025 | $8,000 |
| 2026 | $8,000 |
| 2027 | $8,000 |
| Reached the lifetime FHSA limit in 2027 | $40,000 |
| 2028 | $5,000 |
- plus $40,000 (lifetime FHSA limit)
- –minus $45,000 (contributions from 2023 to 2028)
- =eqauls -$5,000 (a negative amount means you have an excess FHSA amount)
Wesley cannot deduct the $5,000 contribution from February 1, 2028 on his income tax and benefit return for any year. In addition, he will have to pay a tax of 1% on the highest excess FHSA amount in the month for each month until the excess FHSA amount is eliminated. For more information on excess FHSA amounts and how to remove them, go to What happens if you contribute or transfer too much to your FHSA.
- If you have an excess FHSA amount after your maximum participation period has ended and you have not reached your lifetime FHSA limit of $40,000, you may not be able to deduct all of your unused FHSA contributions. This is because after your maximum participation period has ended, your annual FHSA limit is $0.
Example – You may not be able to deduct all of your unused FHSA contributions after your maximum participation period has ended if you have an excess FHSA amount
Beau opens an FHSA on October 4, 2023. Beau’s FHSA participation room in 2023 is $8,000 because this is the first year he opens an FHSA.
Beau decides to contribute $22,000 on October 5, 2023. He does not make any other contributions to his FHSA or transfers from his RRSP to his FHSA for the remainder of the year or in any subsequent year.
In 2023, Beau has an excess FHSA amount of $14,000.
- plus $8,000 (FHSA participation room in 2023)
- -minus $22,000 (FHSA contributions in 2023)
- =eqauls - $14,000 (a negative amount means you have an excess FHSA amount)
Beau will have to pay a tax of 1% on the highest excess FHSA amount in the month for each month until the excess FHSA amount is eliminated. For more information on excess FHSA amounts and how to remove them, go to What happens if you contribute or transfer too much to your FHSA.
On November 1, 2023, Beau makes a qualifying withdrawal for the total value of his FHSA, which includes his excess FHSA amount of $14,000. He closes his FHSA on the same day.
Beau's maximum participation period ends on December 31, 2024.
Beau claims $8,000 as an FHSA deduction when he files his 2023 income tax and benefit return. He also files a return to report and pay the tax on his excess FHSA amount.
Beau will be able to claim $8,000 as an FHSA deduction on his 2024 income tax and benefit return or in any subsequent year.
Beau claims $8,000 as an FHSA deduction when he files his 2024 income tax and benefit return.
Beau cannot deduct the remaining unused FHSA contributions of $6,000 on his income tax and benefit return in any year.
Transfers from an RRSP to an FHSA cannot be deducted
Transfers from your RRSPs to your FHSAs cannot be claimed as a deduction on your income tax and benefit return.
Example – Transfers from an RRSP are not deductible
Reshma opened her first FHSA in 2023. Reshma's FHSA participation room for 2023 was $8,000, since this was the first year that she opened an account.
On June 1, 2023, Reshma contributed $3,000 to her FHSA. On December 1, 2023, she decided to maximize her FHSA participation room and transferred $5,000 from her RRSP to her account.
Reshma can only deduct a maximum of $3,000 on her 2023 income tax and benefit return.
The $5,000 transfer from her RRSP to her FHSA is not deductible in any year.
Other amounts that cannot be deducted
You also cannot deduct the following amounts on your income tax and benefit return for any year:
- Any investment losses incurred within your FHSA cannot be claimed as a deduction on your income tax and benefit return
- Amounts you pay for administration services for an FHSA cannot be claimed as a deduction on your income tax and benefit return
- Brokerage fees charged to buy and dispose of securities within a trusteed FHSA cannot be claimed as a deduction on your income tax and benefit return
- Interest you paid on money you borrowed to contribute to your FHSA cannot be claimed as a deduction on your income tax and benefit return
Example – Losses incurred from an FHSA investment are not deductible
Tran opens her first FHSA on August 11, 2023 and contributes $5,000 to her FHSA. Tran does not make any other contributions to her FHSA or transfers from her RRSPs to her FHSA in 2023.
Tran claims $5,000 as an FHSA deduction when she files her 2023 income tax and benefit return.
In 2024, the value of investments held in Tran’s FHSA decrease and on December 31, 2024, the FMV of Tran’s FHSA is reduced to $1,000.
Tran did not make any contributions to her FHSA or transfers from her RRSPs to her FHSA in 2024.
Tran cannot claim the $4,000 loss incurred in her FHSA as a deduction when she files her income tax and benefit return for any year.
Deductions when you have an excess FHSA amount
You will have an excess FHSA amount if the total of your contributions to your FHSAs and transfers from your RRSPs to your FHSAs for the year are more than your FHSA participation room for the year.
If you have an excess FHSA amount, the deductibility of the amounts carried forward may be impacted. In order to determine the actual amount of FHSA deduction that you may claim when you have an excess FHSA amount, go to How much can you deduct.
If you have made both contributions and transfers to your FHSAs which created an excess FHSA amount, the deductibility of your contributions may be impacted.
Example – Deductions when you have an excess FHSA amount from contributions and transfers
Janella opened her first FHSA in 2023. Janella’s FHSA participation room for 2023 was $8,000. On June 1, 2023, she contributed $5,000 to her FHSA. On December 1, 2023, she transferred $5,000 from her RRSP to her FHSA.
As of December 1, 2023, Janella had an excess FHSA amount of $2,000.
- plus $8,000 (FHSA participation room for 2023)
- –minus $10,000 (June 1 contribution + December 1 transfer)
- =eqauls -$2,000 (a negative amount means you have an excess FHSA amount)
Janella will have to pay a tax of 1% on the highest excess FHSA amount in the month for each month until the excess FHSA amount is eliminated. For more information on excess FHSA amounts and how to remove them, go to What happens if you contribute or transfer too much to your FHSAs.
The fact that Janella had an excess FHSA amount which was caused in part by her transfers means her maximum FHSA deduction available to deduct on her income tax and benefit return for 2023, is only $3,000 (not her $5,000 in contributions).
- plus $8,000 (FHSA participation room for 2023)
- –minus $5,000 (December 1 transfer from her RRSP to her FHSA)
- =eqauls $3,000 (available FHSA deduction for 2023)
For more information on how the $3,000 amount is calculated, go to How much can you deduct.
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