Canada's new Tax-Free First Home Savings Account will be available this week

Mar 29 2023, 4:23 pm

Planning on buying your first home in the coming years? You’ll soon be able to open a new tax-free savings account.

One of the proposed measures announced in the 2022 federal budget is set to become a reality this week.

Banks can officially start offering the Tax-Free First Home Savings Account (FHSA) on April 1, according to the 2023 fiscal budget. As part of Ottawa’s robust housing plan, it aims to help Canadians save for a down payment to buy their first home.

The new registered plan gives prospective first-time homebuyers the ability to save $40,000 on a tax-free basis.

The government compares it to the Registered Retirement Savings Plan (RRSP) in that contributions to the FHSA will be tax-deductible.

And just like a Tax-Free Savings Account (TFSA), withdrawals to purchase a first home—including from investment income—will be non-taxable.

“Tax-free in; tax-free out,” reads the budget.

The annual maximum contribution to the account is $8,000 per year. The government is estimating that the FHSA would provide $725 million in support over five years.

Canada’s 2023 budget also announced a new one-time grocery rebate, and a new dental care plan for millions of uninsured Canadians.

Many Canadians have been expressing their frustrations with how the federal government has chosen to tackle rising food costs online.

Isabelle DoctoIsabelle Docto

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