As tax season unfolds, it’s important to ensure thorough preparation and a clear understanding of your existing or potential savings plans. Take the time to organize your financial documents and familiarize yourself with the tax implications of any savings plans you may already have or consider signing up for. There are several savings plans available today, each tailored to suit different financial needs and goals.

While many are familiar with the Registered Retirement Savings Plan (RRSP), the First Home Savings Account (FHSA) may be a new concept for some. Introduced by the federal government in 2022, the FHSA plan aims to assist first-time homebuyers in saving for their initial home purchase.

But what account aligns best with your financial goals? Both tax-sheltered options have distinct advantages and disadvantages, so it’s important to have a comprehensive understanding of both so you can make an informed decision based on your individual needs.

Is an RRSP right for you?

A Registered Retirement Savings Plan (RRSP) is meant for retirement savings, although it can also be used to save for a down payment or the cost of higher education, so long as withdrawals are paid back within 15 years.


  • Must be a Canadian resident
  • Valid Social Insurance Number (SIN)
  • Have earned income and files a tax return
  • Be 71 years old or younger


  • Any investment income, capital gains or interest earned within the RRSP is not subject to taxes until the funds are withdrawn
  • Tax on over-contributions apply
  • You and your spouse/common-law partner can contribute to each other’s RRSPs
  • An RRSP allows funds to be invested into stocks, bonds, mutual funds and more
  • You can withdraw from your RRSP to fund a down payment or higher education without penalties, so long as you pay the withdrawal back into the account


  • Any funds borrowed from your RRSP for a down payment or higher education must be paid back within 15 years
  • If you need to take funds out for reasons other than a down payment or higher education, you will have to pay tax on the withdrawal as it will be considered income

Is an FHSA right for you?

The First Home Savings Account (FHSA) is great for those looking to put money away for their first home. To open an FHSA, you must not already own property—it is solely for first time home buyers. If your spouse or common law partner owns a home at the time the account is opened, you do not qualify for an FHSA.


  • Must be a Canadian resident
  • Be at least 18 years of age
  • Valid Social Insurance Number (SIN)
  • Considered a first time home buyer


  • Contributions are tax-deductible 
  • You can carry forward a maximum of $8,000 from your untapped yearly contribution allowance to utilize in a subsequent year (within the limitations of the lifetime contribution limit)
  • You can transfer funds from your FHSA to a RRSP or RRIF or vice versa. 


  • Limited contribution maximum of $40,000 over 15 years ($8,000 per year)
  • Tax on over-contributions apply
  • You must use the funds to purchase your first home by the end of the 15th year or the end of the year you turn 71, whichever comes first 
  • If the funds are used to purchase something other than a home, you will be forced to close your FHSA
  • If any funds are withdrawn for other reasons, they will be taxed

Need tax strategy advice?

If you’re looking to save for your goals in the most tax advantageous way possible, don’t hesitate to reach out to us for a consultation. We help individuals and businesses build wealth and financial wellbeing at tax season and beyond.

Contact us for more info.

This post has been prepared for general information purposes. It is not advice. The information presented may not fit your unique situation, please consult one of our trusted business advisors at RHN CPA for further clarification and interpretation of your circumstances.