Breakdown of a marriage or common-law partnership and FHSAs
On the breakdown of your marriage or common-law partnership, you may be required to transfer property from your first home savings accounts (FHSAs) to your current or former spouse or common-law partner .
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Transferring amounts on the breakdown of a marriage or common-law partnership
In general, you are not permitted to transfer property from your FHSAs to your current or former spouse or common-law partner without tax consequences.
However, there will be no immediate tax consequences if you make a direct transfer from your FHSAs to an FHSA, registered retirement savings plan (RRSP) , or registered retirement income fund (RRIF) of your current or former spouse or common-law partner, and both of the following conditions are met:
- Your current or former spouse or common-law partner is entitled to the amount under a decree, order, or judgment of a competent tribunal, or is entitled to the amount under a written agreement relating to a division of property, in settlement of rights arising from the breakdown of your marriage or common-law partnership
- The maximum amount you transfer to your current or former spouse or common-law partner’s FHSAs, RRSPs, or RRIFs is:
- the total fair market value (FMV) of all the property in your FHSAs
- minus your excess FHSA amount
When both conditions are met, the transfer will not impact your current or former spouse’s or common-law partner’s unused FHSA participation room or unused RRSP deduction room .
If you transfer an amount that exceeds the FMV of all of the property in your FHSAs minus your excess FHSA amount, that additional amount will:
- have to be included as income on your income tax and benefit return for the year of the transfer
- be treated as a new contribution to your current or former spouse’s or common-law partner’s FHSAs or RRSPs
- reduce your current or former spouse’s or common-law partner’s unused FHSA participation room or unused RRSP deduction room, and could result in an excess FHSA amount or RRSP excess contributions in certain cases
If an additional amount was transferred to a RRIF, the amount will be treated as a new RRSP contribution with similar tax consequences as noted above.
Property transferred on the breakdown of your marriage or common-law partnership to your current or former spouse’s or common-law partner’s RRSPs or RRIFs from your FHSAs will be subject to the usual rules applicable to RRSPs and RRIFs. When amounts are later withdrawn from the RRSPs or RRIFs, the amounts withdrawn must be included as income in the year received on your current or former spouse’s or common-law partner’s income tax and benefit return. For more information on RRSPs and RRIFs, go to Registered Retirement Savings Plan (RRSP) and Registered Retirement Income Fund (RRIF).
In order to directly transfer property on the breakdown of your marriage or common-law partnership from your FHSAs to your current or former spouse’s or common-law partner’s FHSAs, RRSPs or RRIFs, fill out Form RC723, Transfer from an FHSA to another FHSA, RRSP or RRIF on Breakdown of Marriage or Common-law Partnership and provide it to your current or former spouse's or common–law partner's FHSA or RRSP issuer or RRIF carrier.
Financial institutions do not have to use Form RC723. The institution that transfers your amounts may use other types of documents to record the transfer. The institution has to provide you with confirmation of the details of the transfer.
You must not withdraw the property from your FHSAs yourself and give it to your current or former spouse or common-law partner. This transaction would not be considered a direct transfer and will have immediate tax consequences.
If you withdraw the property from your FHSAs yourself, the amount withdrawn will be a taxable withdrawal and your FHSA issuer will give you a T4FHSA slip, First Home Savings Account Statement showing the amount in box 22. You must report this as income when you file your income tax and benefit return for the year of the withdrawal. For more information on your T4FHSA slip and how to report activities in your FHSA, go to Reporting FHSA activities on your income tax and benefit return.
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Example – Transferring amounts on breakdown of marriage or common-law partnership – Amounts transferred directly
Jordan and Kinsley divorced in 2023. By order of a competent tribunal, Jordan must pay 50% of the FMV of his FHSA to Kinsley. At the time of the transfer, Jordan's FHSA had an FMV of $6,000. Both Jordan and Kinsley have existing FHSAs and Jordan did not have an excess FHSA amount at the time of the transfer.
Jordan filled out Form RC723, Transfer from an FHSA to another FHSA, RRSP or RRIF on Breakdown of Marriage or Common-law Partnership and gave it to Kinsley's FHSA issuer. Once the form was completed by Kinsley's and Jordan's FHSA issuers, Jordan's FHSA issuer directly transferred $3,000 to Kinsley's FHSA.
The direct transfer will have no impact on either Jordan's or Kinsley's unused FHSA participation room, and there will be no immediate tax consequences.
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Example – Transferring amounts on breakdown of marriage or common-law partnership – Amounts not transferred directly
Phil and Claire separated in 2023. According to their written separation agreement, Claire is entitled to receive 50% of the FMV of Phil’s FHSA. The agreement did not specify where Claire must put the money she will receive from Phil's FHSA.
When they separated, Phil's FHSA had an FMV of $8,000. Both Phil and Claire have existing FHSAs and neither of them had an excess FHSA amount at the time of the transfer.
Instead of the amount being directly transferred from Phil's FHSA to a registered plan of her own, Claire opts to receive the $4,000 settlement amount in cash. Phil makes a withdrawal of $4,000 from his FHSA on December 2, 2023, and gives $4,000 to Claire. Claire then decides to contribute $2,000 to her FHSA and $1,500 to her RRSP on December 7, 2023. Claire uses the remaining $500 for her upcoming vacation.
As the $4,000 was withdrawn from Phil's FHSA, it is treated as a taxable withdrawal. Phil must include $4,000 as income on his income tax and benefit return for 2023.
The $2,000 contribution to Claire's FHSA is a new contribution that will reduce her unused FHSA participation room. Likewise, the $1,500 that Claire decided to put in her RRSP is a new RRSP contribution, which will reduce her unused RRSP deduction room.
Claire reported $2,000 as a new contribution to her FHSA when she filed her 2023 income tax and benefit return.
Claire also reported $1,500 as a new RRSP contribution on her 2023 Schedule 7 – RRSP, PRPP and SPP Contributions and Transfers and HBP and LLP Activities.
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Example: Transferring amounts on breakdown of marriage or common-law partnership – Amount transferred includes an excess FHSA amount
Eric and Ivy divorced on August 11, 2023. By order of a competent tribunal, Eric must transfer 50% of the FMV of all of his FHSAs to Ivy’s FHSA. Both Eric and Ivy have existing FHSAs.
Eric filled out Form RC723, Transfer from an FHSA to another FHSA, RRSP or RRIF on Breakdown of Marriage or Common–law Partnership and gave it to Ivy's FHSA issuer. At the time of the transfer, Eric's FHSAs had an FMV of $18,500. Once the form was completed by Eric's and Ivy's FHSA issuers, Eric's FHSA issuer directly transferred $9,250 (50% of the FMV of all of the property in Eric's FHSAs) to Ivy's FHSA. The transfer was completed on November 14, 2023. Eric had an excess FHSA amount of $10,000 just before the transfer.
Since Eric had an excess FHSA amount at the time of the transfer, the maximum amount that was transferred to Ivy's FHSA without immediate tax consequences was:
- plus $18,500 (Total FMV of all of the property in of Eric's FHSAs just before the transfer)
- –minus $10,000 (Eric's excess FHSA amount just before the transfer)
- =equals $8,500 (maximum amount transferred without immediate tax consequences)
Since Eric was required to transfer $9,250 (50% of the FMV of all of Eric's FHSAs) from his FHSA to Ivy's FHSA, the remaining $750 was treated as both:
- a taxable withdrawal from Eric's FHSA at the time of the transfer, which must be reported as income on Eric's 2023 income tax and benefit return
- a new contribution by Ivy to her FHSA at the time of the transfer
- plus $9,250 (property directly transferred from Eric's FHSA to Ivy's FHSA)
- –minus $8,500 (maximum amount transferred to Ivy's FHSA without any tax consequence)
- =equals $750 (treated as both a taxable withdrawal from Eric's FHSA at the time of the transfer and a new contribution by Ivy to her FHSA at the time of the transfer)
Eric included $750 as income when he filed his 2023 income tax and benefit return.
Since Eric had an excess FHSA amount in the year, he was also required to file a return to report his excess FHSA amount. For more information on the return and when it will have to be filed, go to FHSA taxes payable, assessments, and reassessments.
The $750 treated as a taxable withdrawal from Eric's FHSA would also reduce his excess FHSA amount. For more information on excess FHSA amounts, go to What happens if you contribute or transfer too much to your FHSAs.
Likewise, Ivy reported $750 as a new contribution to her FHSA when she filed her 2023 income tax and benefit return. This $750 reduced Ivy's unused FHSA participation room for 2023.
Opening an FHSA after a breakdown of a marriage or common-law partnership
You may open an FHSA after a breakdown of a marriage or common-law partnership if you meet all of the requirements of being a qualifying individual at the time you open your account. For more information on who can open an FHSA, go to Opening your FHSAs.
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