FHSA application package
On this page
- Overview
- Who can offer FHSAs
- Create an FHSA application package
- Amend an FHSA application package
- Close an FHSA specimen plan
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:
- holders can contribute or transfer in from their registered retirement savings plan (RRSP) up to $8,000 per year
- the lifetime contribution and transfer in limit is $40,000
- holders can carry forward unused portions of their FHSA participation room up to a maximum of $8,000
- contributions are tax-deductible
- withdrawals used to purchase a qualifying home are non-taxable
- holders can have more than one FHSA
- subject to the FHSA participation room and lifetime FHSA limits
- the maximum participation period starts when they open their first FHSA
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:
- a company licensed to carry on an annuities business in Canada (such as an insurance company)
- a Canadian trust company
- a depositary, which is:
- a member, or a person eligible to become a member, of the Canadian Payments Association
- a credit union that is a shareholder or member of a body corporate referred to as a “central” for the purposes of the Canadian Payments Act
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:
- Form RC226, Application for an FHSA Identification Number
- FHSA specimen plan
- Holder application form
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:
- For a trust company:
- the holder application form, and the declaration of trust that sets out the terms and conditions of the qualifying arrangement
- For an insurer:
- the holder application form, the policy (including all riders and schedules), and the FHSA endorsement that sets out the terms and conditions of the qualifying arrangement
- For a depositary:
- the holder application form, and the terms and conditions of the qualifying arrangement
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:
- an individual to certify their eligibility as a qualifying individual
- an individual to confirm they are asking the issuer to file an election with the Minister of National Revenue to register the qualifying arrangement as an FHSA under section 146.6 of the Income Tax Act by signing the application (this step is not needed when a successor holder takes over the FHSA after the death of the original holder)
The holder application form must include space for:
- the issuer's name and address
- the account or contract number assigned to the qualifying arrangement by the issuer
- the specimen plan name
- the name, address, date of birth, and social insurance number of the holder
- the date on which the holder enters into the arrangement with the issuer
- the signature of the holder, which confirms that the holder is asking the issuer to file an election with the Minister of National Revenue to register the qualifying arrangement as an FHSA under section 146.6 of the Income Tax Act
- the signature of the issuer
The holder application form must include the following statement:
- The Canada Revenue Agency will provide to the issuer taxpayer information necessary to administer and enforce the FHSA.
The issuer may also want the holder application form to include:
- a statement that the holder will notify the issuer when they are not a resident of Canada
- a warning informing the holder that they may be liable for certain tax consequences arising in connection with a non-compliant qualifying arrangement
- a space where the holder can indicate whether, in the event of the holder's death, the holder's survivor (with space for the spouse's or common-law partner's name and social insurance number), provided they are a qualifying individual, becomes the successor holder under the arrangement (In Quebec, a beneficiary designation of FHSA proceeds in the FHSA contract or will is not valid except in limited circumstances.)
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:
- the organization must act as the agent for all holders under each FHSA, and the trust agreement, annuity contract, or plan terms and conditions (as the case may be) must show the organization to act in this capacity
- each individual FHSA under a trusteed group plan must have a separate trust
- on the holder application form, the holder must authorize the organization to act as their agent and for what purposes (for example, make contributions on the holder’s behalf)
- there must be a clause stating that only the issuer has the authority to amend the specimen plan
- the specimen plan must include a statement that the ultimate responsibility for administering each FHSA lies with the issuer
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:
- The information to be captured on the paperless application must be the same as what is required on the paper application form of an approved specimen plan . As long as the information on the approved application form is captured on the paperless version, the paperless application does not need to be submitted to the CRA for review.
- If the issuer does not have an approved specimen plan and wishes to capture information using a paperless application process (instead of a paper application form) then, in addition to the declaration of trust/terms and conditions/policy and endorsement (as applicable), a hard copy of the screen shots, electronic form(s), or telephone script must be submitted to the CRA for review and approval. In this situation, the regular specimen plan approval process will be followed.
- The holder must be provided with the following:
- a copy of the declaration of trust/terms and conditions/policy and endorsement (as applicable) that is consistent with the approved specimen plan
- a contract number
- a confirmation of the date and time of application
- The issuer will consider the completed application as a request to file an election to register the qualifying arrangement as an FHSA once the holder has provided consent. The issuer is responsible for determining what constitutes consent (such as the electronic or digital signature, or telephone acceptance).
- The issuer’s records must abide by the retention requirements found in the latest versions of IC78-10R, Books and Records Retention/Destruction, and IC05-1R, Electronic Record Keeping.
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:
- changing the logo of the fund management company or investment dealer
- changing the address, telephone number or fax number of the fund management company or investment dealer, or adding an electronic mail address to the application
- adding or deleting the name of a fund or investment
- adding or deleting the commission or fee options available to the applicant
- adding, amending or deleting the particulars of an automatic re-alignment program
- adding, amending or deleting the particulars of a pre-authorized chequing plan
- changing the information required in respect of distributor or sales representative
- adding, amending or deleting the banking information particulars on the application
- adding, amending or deleting the particulars of a provision in respect of automatic switches between mutual funds
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:
- FHSAs no longer conform to the specimen plan
- the issuer is no longer marketing the specimen plan
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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