This is ridiculous.

Of the bizarre things Justin Trudeau left in his wake, this takes the prize. Nothing in Canadian history comes close to being as weird, generous and discriminatory as the FHSA.

Looking for the perfect holiday present for the whiny, homeless, entitled young person in your family? Here ya go. Give her a hundred bucks to open a first home savings account by next Wednesday – and that gift is actually worth $7,900.

The FHSA was created on the back of a pub napkin in the Byward market by four drunk public servants during a three-cocktail lunch on the one day they all had to go to the office that week in 2022. Or so it seems.

This is ridiculous. You must have one if you don’t currently own real estate, or have not for the past four years. The idea behind the FHSA: create a tax shelter allowing money for a down payment to grow freely while providing a powerful incentive to invest. As some people have put it, this is what you’d get if an RRSP and a TFSA ran off together and had a baby.

Every year you can chunk in up to $8,000, with contributions topping out at forty grand. But all of the growth in assets held inside the FHSA (which you can keep in place for 15 years) is untaxed. The astonishing part is that these contributions are 100% deductible from income tax – like putting money into a RRSP. But unlike the retirement account room, the FHSA contributions are not linked to earned income. So a lower-income earner with a generous mom could wipe out all his annual tax bill by making a big (donated) FHSA payment.

But wait. It gets better.

Not only do you receive deductible contributions and 15 years of tax-free growth, but when the money is sucked out of this account, there’s zero tax to pay. Like a TFSA. Then you can use it to buy a house, which has the potential to give you taxless capital gains in the future. (Taking the cash for other purposes makes it taxable. So don’t.)

There’s more.

Money now sitting inside an RRSP, for which you received a tax break, can be transferred into a FHSA. No second tax deduction is allowed, but the funds can then be used to buy real estate – which means taxable retirement money becomes tax-free spending capital.

And, yes, there’s even more.

If, after years of deductible contributions and all that tax-free growth on the ETFs held inside the FHSA, you decide not to buy a house and become a greater fool, all that money can be transferred into an RRSP. So, of course, that means an extra $40,000 in retirement income account room, which you did not have to earn through employment. Bonus: this transfer will not eat up any existing RRSP room. Plus, you can also transfer the money into a RRIF. (By the way, a FHSA needs to be wrapped up by age 71.)

Oh man, there’s more.

Every year there’s an extra $8,000 in contribution room, which can be carried forward one year. It doesn’t matter what you earn. You just need to be a resident, over 18, under 71, houseless for four years and not partnered with anyone owning a place.

But to get the room, you need to open a plan. No plan, no contribution. No carry-forward. No giant, hairy tax break. So give her the hundred bucks and earn the kid almost eight grand in benefit.

Just a minute, though. We have more.

The weird FHSA can be mated to the enhanced HBP to help spawn a house. So all the cash in the first-home account may be used for a down payment in addition to the Home Buyer’s Plan aspect of an existing RRSP. Thus, $60,000 can be taken from a retirement account (or $120,000 for a couple) and used to get real estate. That money comes out of the RRSP tax-free with no repayment required for two years, then a full 15 years to put it back. (Missed repayments are added to annual taxable income.)

And check this out…

If you exit Canada for a while, the FHSA endures. You can even keep contributing, unlike with a TFSA. So long as you don’t withdraw money or buy a house while you’re gone, it just keeps ticking along. When you get back, empty the account and get some property, or transfer the wad into your RRSP. All free of tax.

But what happens if you contribute too much to the FHSA by mistake?

Pas de stress. Justin’s got you covered there, too. To avoid a penalty just transfer the extra amount into an RRSP, if you have room. That will earn a tax deduction, then the following year when more FHSA room arrives, the money can be transferred back. No tax. Of course.

Can this silliness last with a crafty, prudent, cautious, wily central banker leading the nation as opposed to a Katy Perry boytoy with great hair, a trust account and sexy shoulder tat?

Do it.

About the picture: “Here’s a Grinch dog photo to add to your recent Santa photos,” writes Josh. “While they are mostly good dogs they occasionally land on the naughty list.  Ollie, the big guy, ate a ginger bread house.  He has a weakness for carbs.  And Loki, the little ball of fluff, chases the kids up the stairs barking all the way.”

To be in touch or send a picture of your beaast, email to ‘garth@garth.ca’.

Source: https://www.greaterfool.ca/2025/12/23/this-is-ridiculous/