The Tax-Free First Home Savings Account (FHSA), the new registered account that took effect April 1, is now available from an online investing platform.
Questrade Financial Group launched the FHSA on Saturday. Questrade investors will have the option of opening the FHSA in a self-directed account or using the firm’s ETF portfolios.
Questrade president and CEO Edward Kholodenko said the firm was focused on making the accounts available for clients rather than on being first to market.
“This is something that’s demanded in the marketplace and we made sure that we were going to get it out on the first day available,” Kholodenko said.
There’s no fee to open a Questrade FHSA and no minimum period that an account must remain open, he said.
Banks and other financial firms are rushing to set up back-office systems and internal procedures for the accounts. The legislation to enact the FHSA received royal assent on Dec. 15, 2022, leaving firms with a tight schedule to launch the accounts.
The Investment Funds Institute of Canada and member firms have been working with the Department of Finance and the Canada Revenue Agency as they prepare to offer the accounts, which may take a few more months for some.
Kholodenko said it was a lot of work to understand all the technical details and get approvals from the CRA.
“CRA has a very well-documented process for getting these things approved, but we did need to make sure we had the proper interpretation and the proper view technically on how it’s going to work,” he said.
When TFSAs became available in 2009, there was confusion around some of the rules that led to overcontributions. Kholodenko said investors’ familiarity with the TFSA should mean less confusion with the new accounts.
“It has a lot of the hallmarks of the TFSA and functions in much the same way, so hopefully people are more educated now,” he said.
“The training internally was pretty straightforward.”
The FHSA allows first-time homebuyers to save up to $40,000 on a tax-free basis, with an annual contribution limit of $8,000. To open an FHSA, an individual must be a Canadian resident aged at least 18 and not have owned a home during the current year or preceding four calendar years.
Regardless of when an eligible person opens an FHSA this year, they will have access to $8,000 of contribution room. Unused FHSA contribution room can be carried forward, up to a maximum of $8,000, but contribution room begins to accrue only after an account has been opened.
Questrade last year launched QuestMortgage, an online service for people looking to purchase a home or renew their mortgage.
With files from Rudy Mezzetta
Clarification: A previous version of this article said Questrade has a $1,000 minimum deposit for the accounts. Questrade has clarified that there is no minimum to open an account, just a threshold to start investing. That threshold is $1,000 for clients in a Questwealth Portfolio account and $250 for a self-directed account.