FHSA application package

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Overview

The first home savings account (FSHA) is a qualifying arrangement  between a holder  and an issuer  that is registered with the Canada Revenue Agency (CRA). Its main purpose is to give prospective first-time home buyers the ability to save for a down payment on a tax-free basis.

Some key features of the FHSA include:

Who can offer FHSAs

A financial institution (known as an issuer) must receive approval from the Canada Revenue Agency (CRA) before it can offer first home savings accounts (FHSAs) to their clients.

An issuer is:

The issuer is responsible for administering FHSAs, although they may transfer some administrative duties to another financial institution (known as an agent). To do so, the issuer must send the CRA a letter that authorizes that agent to administer FHSAs on their behalf.

Create an FHSA application package

Before an issuer can offer FHSAs to the public, they must submit their FHSA application package to the Registered Plans Directorate for approval. The Directorate will review the package to make sure that it is complete and complies with CRA and Income Tax Act requirements.

An application package includes:

Note

For any submissions approved before April 1, 2023, the CRA will require wording in the specimen plan that indicates that any qualifying arrangements  entered into will not come into effect until after March 31, 2023.

Form RC226, Application for an FHSA identification number

Each issuer is required to get an FHSA identification number from the CRA. To do so, the issuer must complete Form RC226, Application for an FHSA identification number, and send it as part of the issuer's FHSA application package to the Registered Plans Directorate at the CRA.

FHSA specimen plan

The specimen plan is a true copy of all documents that will be given to the client who wants to open an FHSA. The issuer must include the following documents as part of their specimen plan:

Holder application form

Only a qualifying individual  may become the holder of an FHSA. The holder is the individual who enters into a qualifying arrangement with an issuer . Upon the individual's death, the surviving spouse or common-law partner (here referred to as the survivor) may become the holder if the individual had designated the survivor to be the successor holder and if the survivor is a qualifying individual. When a successor holder takes over the FHSA after the death of the original holder, they need to complete an FHSA application form so that the issuer can collect the successor’s attestation that they are a qualifying individual.

Note

In Quebec, a beneficiary designation of FHSA proceeds in the FHSA contract or will is not valid except in limited circumstances.

The holder application form must require:

The holder application form must include space for:

The holder application form must include the following statement:

The issuer may also want the holder application form to include:

Note

The CRA will accept combined individual and group plan application forms. However, multi-purpose application forms that accommodate other plans such as TFSAs, RSPs or RIFs will not be accepted.

The word registered should not be used to refer to the name of the specimen plan on the application form or other documents, since the specimen plan is not registered.

The specimen plan must include a statement that the ultimate responsibility for administering the arrangement lies with the issuer.

Agents and group plans

An issuer may wish to set up a group plan that is sponsored by an employer, association, or other organization (hereafter referred to as an “organization”). A group plan is a collection of individual FHSAs for associated individuals, such as employees of an employer or members of an association. Each FHSA within the group plan is still a qualifying arrangement  that must be entered into between the issuer and the holder and is registered the same as any other FHSA.

An organization is not permitted to contribute to a holder’s FHSA. They can, however, make a contribution on a holder’s behalf, for example, by payroll deduction. Organizations may also choose to offer a taxable benefit in the form of FHSA contributions. In this way, the contribution is considered to have been made by the holder. More information on taxable benefits can be found in T4130 Employers' Guide - Taxable Benefits and Allowances - Canada.ca.

To set up a group plan, the issuer must satisfy the following conditions:

Note

The conditions for registering an FHSA are very specific and require each individual’s attestation to be a qualifying individual. Therefore, the CRA will not approve specimen plans that indicate mandatory enrollment in an FHSA group plan.

Online, electronic, or telephone applications

FHSA issuers  have various options for obtaining information from potential holders . When issuers gather client information using an “online, electronic, or telephone” (hereafter referred to as “paperless”) application process, they must meet the following requirements:

Get CRA approval

Send the FHSA application package to the Registered Plans Directorate for approval.

By mail and courier

Due to a building refit spanning multiple years, the Registered Plans Directorate’s mailing address has been temporarily changed. Please use the following address for all correspondence until further notice:

Registered Plans Directorate
Canada Revenue Agency
2215 Gladwin Cres
Ottawa ON  K1B 4K9

If you wish to send plan-related information to us by courier, please note that information related to particular plans is sensitive information that must be handled securely.

Amend an FHSA application package

The CRA must approve all changes made to the specimen plan  documents and holder application form  before the issuer can offer the amended FHSAs to clients. This includes any legislative changes to the FHSA program. The submission must indicate the date the amendment goes into effect and whether existing plans will be amended. The CRA will tell the issuer whether or not the amendment is acceptable. If approved, the issuer must communicate the changes to all FHSA holders. A commercial copy of the documents being marketed to holders only needs to be submitted if the CRA requests them.

Form RC226, Application for an FHSA Identification Number does not need to be submitted when you send an amendment to an approved application package.

The following is a list of changes to the holder application form that do not require prior approval:

Send amendments to the Registered Plans Directorate for approval:

By mail and courier

Due to a building refit spanning multiple years, the Registered Plans Directorate’s mailing address has been temporarily changed. Please use the following address for all correspondence until further notice:

Registered Plans Directorate
Canada Revenue Agency
2215 Gladwin Cres
Ottawa ON  K1B 4K9

Close an FHSA specimen plan

The issuer responsible for administering an FHSA specimen plan must notify the CRA when:

Notify the CRA by mail or courier at:

Due to a building refit spanning multiple years, the Registered Plans Directorate’s mailing address has been temporarily changed. Please use the following address for all correspondence until further notice:

Registered Plans Directorate
Canada Revenue Agency
2215 Gladwin Cres
Ottawa ON  K1B 4K9

The CRA will close the specimen plan and all related FHSAs.

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