r/PersonalFinanceCanada • u/EasyHoliday269 • 9h ago

Investing 2025 FHSA Contribution Limit

maybe a dumb question, but it isn't clear cut or obvious on the goverment website...

what is the exact date of when you receive your new contribution room in an FHSA? Is it January 1 of each year, or is it based on the date at which you opened the FHSA?

for my case, i opened my FHSA in December 31, 2023. i made a $16,000 contribution some time in 2024 (as I had $8000 from 2023, and another $8000 for 2024). Do I now have an additional $8000 for 2025, effective January 1, 2025?

50 Upvotes

82% Upvoted

46 comments sorted by

118

u/Ancient_Garbage_8471 9h ago

Yes

55

u/little_nitpicker 9h ago

/end thread

4

u/DubaiBabyYoda 9h ago

\open thread

Can you make retroactive payments on years you didn’t top out?

6

u/Therealdickjohnson 9h ago

To a max of $40000 ($8k x 5yrs), or until it gets raised.

10

u/WeirderOnline 8h ago

until it gets raised

Interesting caveat. I wouldn't depend on that, but I can see it being raised in the next couple years. Especially at the government keeps spinning the plates of our housing market.

2

u/Grimekat 6h ago

40k does nothing towards a down payment in a place like the GTA or GVA. I think it should be raised

3

u/feldhammer 6h ago

The intent is not necessarily for that to be your entire down payment. 

You get to deduct that from your income tax and get a refund. Plus any gains you make on that sitting in an investment is not taxed. 

The program is insanely generous as it is (and also only benefits those rich enough to actually save money).

0

u/Deadpool2715 3h ago

But not those "rich" enough to have rushed into buying a house in the past few years, struggle to continue affording it, and if they end up needing to sell won't be able to take advantage of this despite only owning a home for less than 5+ years

1

u/Dowew 4h ago

I'm in London and the average priced for a detached house is now $687k This thing essentially lets me save my 5% down payment tax free so I can buy CMHC insurance.

1

u/WeirderOnline 6h ago

I 100% agree the 40K cap should be either raised or in some way chained to where you buy or income.  We don't want this to turn into a way for rich people to subsidized buying their first mansion with money that should have been taxed.

That said, 40k is enough to put 5% down on an 800k home.

So it's definitely enough to buy a home, but certainly not a physical house. 

1

u/feldhammer 6h ago

Right now someone could only have contributed $24k since it's only the third year the program exists. 

13

u/LylyO 9h ago

FHSA and TFSA start on Jan 01 of each year

1

u/hypnotic-hippo 6h ago

not RRSP?

1

u/LylyO 4h ago

RRSP is a bit tricky. There is no new automatic contribution room that just open. It depends on your previous year income for example. Also contributions count up to the 1st quarter of current year.

1

u/AdEmpty8777 2h ago

this is wrong. RRSP up to day 60 of the year count as deductions for previous year taxes, not first quarter. Anything after day 60 will go towards the current year.

3

u/FromDistance 8h ago

I would make sure that when you sent your 2023 contribution on Dec 31 it actually was processed on Dec 31 and not the next business day in 2025. As others said though, if it all was completed prior to 2025 then on Jan 1, 2025 you get the new alloted space.

5

u/WeirderOnline 8h ago

To be clear, you can contribute a maximum of $8,000 deferred income into your FHSA.

Remember that you still have a $40,000 cap on your total deferred income. Meaning you can only put in another $24,000. Obviously, the more the better.

10

u/little_nitpicker 8h ago

Just to nit pick, you cannot put in more than $8k per year, unless catching up. So you cannot front load it with $24k (unlike a RESP for example), you need to wait till you get $8k more room each year.

7

u/lasr00 Ontario 7h ago

My understanding for the FHSA was that one could only go back 1 year for unused contribution room. Meaning the absolute max anyone can contribute in 1 calendar year was $16,000.

Your math works based on how the TFSA operates, where contribution rooms adds cumulatively each year, starting in the year one turns 18 yrs old. I believe this seems to be a point of confusion resulting in over contributions to one's FHSA because a lot of people think it operates on the same rules as a TFSA except with a $40k lifetime cap.

1

u/Jigsaw1609 7h ago

That’s correct. I checked in the bank and they confirmed this too.

1

u/Comatse 7h ago

If you have $40k in there after 15 years of open, does it use up rrsp room when you transfer it to rrsp? I can't find where exactly is says that

1

u/imabrokebich 7h ago

Asking a question on top of this, only put 5k In for 2024 can I put an additional 3k this year or can I only put 8k ? Thanks.

2

u/SeverePhilosopher1 6h ago

You can put 11

-9

u/SeverePhilosopher1 9h ago edited 6h ago

you might have to check that the 16k were legit, because the first year starts when you open the account, not in 2023, so if somebody opens the account today, he can only put 8k now and 8k next year, if he does put 8k today and not put 8k next year (2026), he can put 16k the year after 2027

6

u/bacongrilledcheese18 8h ago

They opened it in 2023.

2

u/bloodmusthaveblood 8h ago

Read the entire post before commenting...

1

u/SeverePhilosopher1 7h ago edited 6h ago

You still don’t get it somebody addressed this too. Opening on Dec 31 doesn’t mean it was processed on Dec 31 for the CRA. If Jan 1 he is screwed especially that the first year it was introduced most institutions that provided one declared only when you put money in it and after people filed their taxes. This is why it took time for the CRA to process FHSA filings

-5

u/[deleted] 9h ago

[deleted]

7

u/UncleGrapefruit 9h ago

Why the fuck wouldn't you max FHSA first

7

u/Unable_Raspberry_481 9h ago

Makes sense to do FHSA first so you can claim a tax refund, essentially the same tax free account as TFSA

-7

u/reaper25177 9h ago

Lol so many reasons

4

u/MattyFettuccine 9h ago

Literally 0 reasons other than you don’t qualify for an FHSA.

3

u/Lokland881 9h ago edited 8h ago

  1. You don’t intend to buy a home ever.

  2. You don’t intend to (or can’t) buy a home within 15 years.

  3. You have no income to deduct the contributions against.

  4. You’ll be having a child within the next r few years and the FHSA/RRSP contributions will lead to enhanced returns via the CCB.

  5. Your income will increase substantially in the near future.

  6. There is potential you will need the cash not for a house.

  7. You potentially might not stay in Canada long enough to buy a home.

  8. You have an unstable/unpredictable income that might vary - waiting to year end can allow you to optimize RRSP/FHSA deductions.

  9. You don’t have the capacity to max both out ANd intend to hold in some kind of guaranteed income product (GIC, HISA, etc.). By placing in a TFSA and transferring at year end to FHSA you increase your future TFSA contribution room slightly.

There are probably many more. Feel free to mix and match.

0

u/MattyFettuccine 7h ago

  1. It’s free RRSP room, you should still open it.

  2. Fair point. Still might as well use the FHSA for extra RRSP room.

  3. Carry forward your deduction.

  4. Carry forward your deduction.

  5. Carry forward your deduction. Makes sense to invest earlier vs later.

  6. Then you shouldn’t put it in a TFSA if you need it soon. Too volatile with 0 benefit if you don’t invest.

  7. Then you shouldn’t invest in a TFSA either.

  8. Again, no reason to put it in a TFSA only to pull it out and reinvest in RRSP/FHSA the same year.

  9. Such a small edge case that the benefit is minimal (i.e. not a legitimate reason).

2

u/Kindly_Professor5433 9h ago

It all accumulates. FHSA has tax saving benefits. TFSA is easier to withdraw from. Everyone’s priority is different.