FHSA with Aaron Hector | E106

Financial Planning For Canadian Business Owners

Jason talks to Aaron Hector about Canada's newest registered account, the FHSA - The First Home Savings Account. Aaron Hector is a private wealth advisor for CWB Wealth. He works primarily with individual clients and family direct client relationships.

Episode Highlights:

• 02:30: Aaron talks about the restrictions in the FHSA account. You can put up to $40,000 in your lifetime. But you can only put $8000 per year.
• 03:07: Jason explains how housing is a bigger concern in Canada than in US.
• 03:52: One of the things that always happens when new accounts come out is that invariably people don't understand the rules.
• 06:40: Aaron talks about the penalty and additional expenses associated with the FHSA account.
• 09.26: Before opening the FHSA account it is extremely important to read the small prints, eligibility criteria and guidelines, says Aaron.
• 11:05: If you start with making fresh contributions to your FHSA, maybe you marry someone who has a house already, that's hour on buying a home for whatever reason that homeownership gold doesn't come to fruition.
• 12:38: There is a lot more nuance than people are giving credit to the FHSA account, says Aaron.
• 15:22: You could look at again going into your RRSP and then just deferring that tax, says Aaron.
• 18:44: You can name a beneficiary successor holder, so successor Holder can only be your spouse or common law. If you pass, then your spouse assumes the count as an FHSA, rather than just liquidating the account and getting the money, but on the beneficiary side, this is interesting.
• 22:04: As per Jason if he had FHSA, he would use that option to roll it over into a rift.
• 22:58: If you have to be a first-time home buyer when you open the account the only other time that it makes a difference is when you try and make it tax free.
• 24:49: If you had money in it's like how you get a double deduction so you get a deduction when you make an RRSP contribution and then the same money you could in theory withdraw through the home buyers plan.

3 Key Points:

1. To open an FHSA account you need to be a Canadian Resident, not a Canadian Citizen. You have to be at least 18 years old, and you can't be older than 71.
2. Aaron shares few horror stories of kids in trust for accounts going sideways. He also shares the nuances and concerns of people that one should be aware of.
3. If you name someone who's not your spouse, as a beneficiary of your FHSA they get the money, but they pay the tax too. The tax leaves the original account holder not dealt with in the final tax return of the deceased. The beneficiary pays the taxes, so it's kind of the opposite tax treatment.

Tweetable Quotes:

• "FHSA works both as an RRSP and a tax-free savings account." - Aaron
• "FHSA is almost like the HSA in the US. The health savings account and it's tax deductible." - Aaron
• "The timeline for FHSA is really the same timeline as an RRSP 1871 and you need to be deemed a first-time home buyer." – Aaron
• "For someone who maybe doesn't have a lot of spare cash, that's a way to use the FHSA program without making kind of brand-new contributions." – Jason
• "If I do an RFP transfer cause maybe that's what I want to do, then I don't get 40, I don't get an additional deduction." – Aaron
• "I am not big in putting money in the hands of young adults until they've proven that they can handle it." - Aaron

Resources Mentioned:

• Facebook – Jason Pereira's Facebook
• LinkedIn – Jason Pereira's LinkedIn

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