FHSA Annual Deadline is Coming and Here’s What You Need to Know

Unlike RRSPs, there's no 60-day grace period. Therefore, by missing the deadline, you've lost a valuable opportunity to reduce your taxable income for 2025.

Any contributions you make on or after January 1st - which are tax deductible just like RRSP contributions - will count towards your 2026 tax year. 

If you receive a year-end bonus or have extra cash from holiday gifts or savings, consider directing it toward your FHSA before the calendar flips could make a meaningful difference, both for your tax bill and your future home.

Tax Filing Requirements

When tax season rolls around, you'll need to report your FHSA activity. If you opened an FHSA, made contributions, or took withdrawals or had transfers during 2025, you are required to complete Schedule 15 (FHSA Contributions, Transfers, and Activities) your tax return. Your financial institution will provide a T4FHSA slip (typically by the end of February) showing your contributions and withdrawals for the year.

Understanding Your Contribution Limits

Your FHSA contribution room only starts accumulating once you open your FHSA. Unlike TFSAs, which grant contribution room based on your age, the FHSA clock doesn't start ticking until you actually open an account. That means if you delay opening your account, you delay when you begin earning contribution room.

In the first year you open your FHSA, your annual contribution room is $8,000. For subsequent years, you get another $8,000 of new room per year, plus any unused room carried forward from prior years.  The maximum contribution for any one year is $16K. 

The lifetime contribution limit for an FHSA remains $40,000.

For example:

• If you open an FHSA in 2024 and don’t contribute anything that year, you could potentially have $16,000 of contribution room in 2025 ($8,000 for 2025 + $8,000 from 2024).
• If you open in 2026 instead, you miss out on some of that early room and could have less available overall when you start saving.

It is crucial to remember that although unused annual contribution room does carry forward indefinitely after opening your FHSA, the maximum amount that can be carried forward from prior years is capped at $8,000.  

Overcontribution Penalties

Accidentally contributing more than your available room triggers a penalty of 1% tax per month on the highest excess amount. This penalty continues every month until you either remove the excess contribution or gain enough new contribution room in a future year  to absorb it.

So how do you fix this in case of overcontribution?

• A designated withdrawal removes the excess amount directly from your FHSA.
• If the excess came from an RRSP to FHSA transfer, you can use a designated transfer back to an RRSP or RRIF instead.

These designated amounts are not taxable and don’t count as regular contributions. Also, removing the excess does not regain contribution room so any over-contributed amount you withdraw this way is permanently lost from your FHSA contribution limit.

To avoid this costly mistake, check your contribution room before making deposits. You can find your available FHSA contribution room on your CRA Notice of Assessment or by logging into your CRA My Account.

Here's what you need to do before December 31

1. Check your current FHSA contribution room
2. Review your current investments
3. Calculate how much you can contribute
4. Decide whether to claim the deduction now or carry it forward

Year-End Tax Planning

1. Estimate your current year's taxable income
2. Calculate your potential tax savings
3. Coordinate FHSA contributions with RRSP and TFSA contributions
4. Consider professional advice

If your financial situation is complex, maybe you're self-employed, have rental income, or are navigating a major life change, a financial advisor can help you optimize your contribution strategy across all your accounts.

What makes FHSA so powerful is its unique combination of tax benefits that you won't find in any other Canadian registered account. We highly recommend you learn more about registered accounts.

Don't Let This Deadline Pass

This is an opportunity to reduce your tax bill, accelerate your home savings, and take advantage of one of Canada's most generous savings programs.