The First Home Savings Account (FHSA) is a registered plan introduced in the 2022 Federal budget, designed to help first-time home buyers save for their initial home purchase or construction.
This account offers the advantage of tax-free savings, subject to specific limits, to facilitate the acquisition of a qualifying first-time home buyer. If you established an FHSA in 2023, you are eligible to deduct up to $8,000 in contributions made to this account by December 31, 2023, from your income on your 2023 tax and benefit return, leveraging the FHSA deduction.
Employers withholding an FHSA contribution from an employee's pay reduces the taxable income, provided the contribution is made on the employee's behalf. Employers must ensure they have valid reasons to believe the employee is eligible for this deduction. Typically, confirmation from the employee or evidence of their FHSA eligibility, such as a participation room statement from their notice of assessment, suffices as reasonable grounds.