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. It is important to note that transfers from your registered retirement saving plans (RRSPs) to your FHSAs are not deductible.
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How much can you 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, similar to RRSP contributions.
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 The total of all your FHSA deductions for 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.
If you cannot or you decide not to claim some or all of your available contributions as an FHSA deduction in the year, you can carry forward that amount and may be able to claim your unused FHSA contributions as an FHSA deduction in a future year. If you have an excess FHSA amount , it may reduce the deductibility of amounts carried forward. For more information, go to Unused FHSA contributions.
After you open 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 notice of assessment or reassessment. More information about these notices will be available at a later date.
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Example
Chandler opened his first FHSA in April 2023 and contributed $5,000 to his account. He did not make any other contributions to or transfers from his RRSP to his FHSA for the rest of the year. He heard that individuals who make contributions to their FHSA can claim a deduction 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) web pages to confirm how much he is allowed to claim as an FHSA deduction 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.
Which contributions can you 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. For more information on FHSA contributions and how to make them, go to Participating in your FHSAs.
- Contributions you make to an FHSA 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.
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Example
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 made after the first qualifying withdrawal
If you make contributions to your FHSAs after you make your first qualifying withdrawal .
- Those contributions cannot be deducted on your income tax and benefit return for any year.
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Example
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.
Non-deductible transfers from an RRSP to an FHSA
All contributions to your FHSAs and transfers from your RRSPs to your FHSAs made during the year will reduce your unused FHSA participation room for the year.
- Transfers from your RRSPs to your FHSAs cannot be claimed as a deduction on your income tax and benefit return.
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. For more information, go to Deductions when you have an excess FHSA amount.
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Example
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.
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. Your unused FHSA contributions can be carried forward 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.
After 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 notice of assessment or reassessment. More information about these notices will be available at a later date.
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Example
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)
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.
- 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.
In addition, if you have an excess FHSA amount, you 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, go to What happens if you contribute or transfer too much to your FHSAs.
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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 about excess FHSA amounts and how to remove it, 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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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 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.
Lifetime FHSA limit 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, go to What happens if you contribute or transfer too much to your FHSA.
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