The Liberals introduced the FHSA in the 2022 federal budget to help Canadians save for a down payment on a first home. Contributions to the plan would be tax deductible, much like an RRSP, but withdrawals would be tax free, like a TFSA. There would be a lifetime contribution limit of $40,000 and an annual contribution limit of $8,000.
New accounts are supposed to be ready for 2023, depending on the budget.
Josée Baillargeon, senior policy advisor at IFIC, said the institute met with officials from the Canada Revenue Agency (CRA) and the Department of Finance to discuss the rules governing the FHSA. IFIC also submitted an 11-page document in conjunction with other financial sector organizations to Finance with questions about the new plan.
Offen said the industry expects Finance to release a bill to implement FHSA by the end of July, followed by a 60-day comment period. More bills would likely follow in October, with final legislation expected to pass in mid-December.
“If we’re going to release this in early 2023, we might have to start [building operations] before we actually know what we’re building, so that can be a bit of a concern,” Offen said.
The industry is seeking more FHSA guidance in four key areas before it can move forward:
- customer integration requirements;
- youtaxation rules, including filing and required forms;
- rules governing family ties, including whether or not there will be a spousal FHSA; and
- rules governing beneficiary designations and estates.
Offen said the industry expects to have further consultations with ARC in the second half of the year.
“There are a lot more unknowns than knowns at this point,” said Baillargeon.
She added that ARC and Finance officials have nevertheless been proactive in helping the industry prepare for the launch of the FHSA. “IIt will be an ever-evolving process.
During the same session, Benjamin Latta, Head of the CRS and FATCA Financial Institutions Compliance Section at the Canada Revenue Agency, stated that on-site audits of the Foreign Account Tax Compliance Act and of the Common Financial Institution Reporting Standard would resume at the “end of 2022 or early”. 2023.”
Latta also said the CRA does not intend to apply penalties “at this time” before conducting an audit, which would give the financial institution an opportunity to prove compliance. Being chosen for an audit does not necessarily indicate non-compliance, he said, since the CRA aims to audit a diverse and representative set of institutions.
– With files by Melissa Shin