Page 11 - December 2023 News On 7

6 WAYS TO PROTECT YOURSELF AGAINST CYBER THREATS
This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.
Submitted by Scott Foster, Financial Advisor, Edward Jones
317 DECLAIR ROAD, MADOC, ON K0K 2K0

SHOULD YOU OPEN AN FHSA BEFORE DECEMBER 31ST?

Launched earlier this year, the Government of Canada launched a new type of investment account to help Canadians save
toward a home purchase. The First Home Savings Account (FHSA) is a government-registered, tax-free investment savings
account to which you can contribute up to a lifetime maximum of $40,000 toward the purchase of your first home.

Eligibility: Can you open an FHSA: Before we look at whether it makes sense to open an FHSA this year, let's first review
the requirements to open an FHSA. To be eligible to open an FHSA, you must:
• Be a resident of Canada,
• Be at least age 18 (or age 19 in provinces where 19 is the age of majority) but less than age 71,
• Not have lived in a home owned by you or your spouse/common-law partner in the year that the account is opened, or
the previous four years,
• Not have previously used an FHSA to buy a home.

Considerations: Should you open an FHSA: Of course, just because you can open an FHSA this year doesn't necessarily
mean you should. Now that we've covered the eligibility requirements for opening an account, let's look at some key
factors to consider when determining if it makes sense for you to open an FHSA this year.

In addition to the $40,000 lifetime FHSA contribution limit, there is also an annual $8,000 contribution limit. carry forward
room accumulates only after the FHSA is open. This is perhaps the top advantage to opening an account before year-end:
to gain the contribution room for this current year, which can be carried forward if not used in the current year. Of
course, the other key advantage to opening the account and making contributions as soon as possible is to maximize the
timeframe available for tax-sheltered compound growth.

On the other hand, there are some potential drawbacks to
opening an account too early. First, the FHSA has a maximum
lifespan of 15 years, so opening an account prematurely
could result in the forced closure of the account before
you're ready to make a home purchase.

For example, an individual that opens the account at age 18
would have to purchase a house by age 33, else the FHSA
would be collapsed and the withdrawals fully taxable.
Furthermore, given that FHSA contributions are tax-
deductible, those deductions are more advantageous when
your income is higher and you're in a higher income tax
bracket. Granted, it's possible to contribute to an FHSA in
one year and claim the deduction in a subsequent year. If
you're at a younger age with lower income, it may be
beneficial to wait until a future year to make your FHSA
contributions, or at least wait until a future year to claim the
deduction.

The FHSA presents Canadians with a great opportunity to
save toward the purchase of a home. Contact me to find out
if opening an FHSA makes sense for you.