Tax-Free First Home Savings Account (FHSA)
KNOWLEDGE EXPECTED OF: QAFP® Professionals
Highest Knowledge Level: Evaluation
Knowledge Levels and Associated Verbs
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Awareness
The state of being aware that something exists / to have familiarity with a particular activity or subject
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Understanding
To comprehend the general relationship of particulars / to have an expertise with how something works
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Application
Ability to put information to use / to use knowledge for relevant, practical purposes
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Evaluation
To judge or conclude by utilizing data / a systematic determination of something’s worth or significance
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Define
To state exactly the meaning of
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Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
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Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
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Determine
To ascertain / to come to a decision, such as by investigation or reasoning
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Compare
To note the similarities and differences between two or more things
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Estimate
To determine an approximate value for
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Calculate
To find the value using mathematics
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Convert
To change from one form or purpose to another
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Evaluate
To reach a conclusion or make a through careful study
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Interpret
To give the meaning of / to construe or understand / to translate orally
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Hold cursor over or click on each term to read its definition.
- Define the terms associated with the First Home Savings Account1
- First-time home buyer
- Qualifying home
- Qualifying withdrawal
- Explain the qualifying conditions to participate in the First Home Savings Account.
- Explain who can contribute into an individual’s First Home Savings Account.
- Explain the conditions that will cause a First Home Savings Account to cease to qualify as a First Home Savings Account.
- Explain the qualifying conditions to make contributions to a First Home Savings Account.
- Annual contribution limit
- Lifetime contribution limit
- Estimate unused First Home Savings Account contribution room.
- Explain how contributions made to a First Home Savings Account affect unused First Home Savings Account contribution room.
- Explain the carry-forward provisions for unused First Home Savings Account contribution room.
- Identify the deadline by which contributions to the First Home Savings Account are tax-deductible for a given year.
- Determine the tax impact of contributions made to a First Home Savings Account.
- Cash
- Deposit in-kind
- Transfer from another First Home Savings Account (FHSA)
- Transfer from a Registered Retirement Savings Plan (RRSP)
- Transfer from a spousal Registered Retirement Savings Plan
- Transfer from a Register Retirement Income Fund (RRIF)
- Determine how each of these factors may impact the suitability of contributing to a First Home Savings Account:
- Expected cost and time period for qualifying home purchase
- Tax rate at time of contribution
- Liquidity required
- Propensity to draw on savings
- Impact of future withdrawals on government benefits
- Impact on cash flow
- Opportunity cost of contribution
- Evaluate how each of the factors may impact the suitability of contributing to a First Home Savings Account.
- Estimate the tax impact of contributing to a First Home Savings Account.
- Define excess First Home Savings Account contributions.
- Explain the penalty tax imposed by the Canada Revenue Agency on excess First Home Savings Account contributions.
- Calculate the penalty tax that may be imposed by the Canada Revenue Agency based on a First Home Savings Account excess contribution.
- Explain the options available when a cumulative excess contribution for a First Home Savings Account exists.
- Determine how each of these factors may impact the suitability of withdrawing a cumulative excess contribution from a First Home Savings Account:
- Penalty cost of maintaining excess amount in the plan
- Expected rate of return on investments
- Expected time period for First Home Savings Account contribution room to match the value of the excess amount
- Plans for excess amount to be withdrawn
- Evaluate how each of the factors may impact the suitability of withdrawing a cumulative excess contribution from a First Home Savings Account.
- Explain the purposes for which a qualifying withdrawal from the First Home Savings Account may be used.
- Explain how a First Home Savings Account interacts with the Home Buyers’ Plan (HBP).
- Determine the impact of a qualifying withdrawal from a First Home Savings Account.
- To taxable income
- To the ability to claim income tested government benefits and credits
- Determine how each of these factors may impact the suitability of withdrawing from a First Home Savings Account:
- Previous home ownership
- Move-in or occupancy date
- Written agreement to buy or build a qualifying home
- Location of the home
- Equity rights to the property
- Loss of asset growth within the First Home Savings Account
- Cash flow needs
- Evaluate how each of the factors may impact the suitability of withdrawing from a First Home Savings Account.
- Define a qualifying transfer between First Home Savings Accounts or other registered savings plans.
- Estimate the tax impact of transferring capital property into a First Home Savings Account.
- Determine how each of these factors may impact the suitability of transferring capital property into a First Home Savings Account:
- Withdrawal options
- Tax impact
- Evaluate how each of the factors may impact the suitability of transferring capital property into a First Home Savings Account.
- Determine how each of these factors may impact the suitability of transferring capital property out of a First Home Savings Account:
- Cash flow needs
- Withdrawal options
- Evaluate how each of the factors may impact the suitability of transferring capital property out of a First Home Savings Account.
- Define the types of beneficiaries that may be available on a First Home Savings Account.
- Successor holder
- Designated beneficiary
- Identify who may be named as a successor holder of a First Home Savings Account.
- Explain the benefit of being named a successor holder of a First Home Savings Account.
REFERENCES
KNOWLEDGE EXPECTED OF: CFP® Professionals
Highest Knowledge Level: Evaluation
Knowledge Levels and Associated Verbs
|
Awareness
The state of being aware that something exists / to have familiarity with a particular activity or subject
|
Understanding
To comprehend the general relationship of particulars / to have an expertise with how something works
|
Application
Ability to put information to use / to use knowledge for relevant, practical purposes
|
Evaluation
To judge or conclude by utilizing data / a systematic determination of something’s worth or significance
|
||||||
|---|---|---|---|---|---|---|---|---|---|
|
Define
To state exactly the meaning of
|
Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
|
Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
|
Determine
To ascertain / to come to a decision, such as by investigation or reasoning
|
Compare
To note the similarities and differences between two or more things
|
Estimate
To determine an approximate value for
|
Calculate
To find the value using mathematics
|
Convert
To change from one form or purpose to another
|
Evaluate
To reach a conclusion or make a through careful study
|
Interpret
To give the meaning of / to construe or understand / to translate orally
|
Hold cursor over or click on each term to read its definition.
- Define the terms associated with the First Home Savings Account1
- First-time home buyer
- Qualifying home
- Qualifying withdrawal
- Explain the qualifying conditions to participate in the First Home Savings Account.
- Explain who can contribute into an individual’s First Home Savings Account.
- Explain the conditions that will cause a First Home Savings Account to cease to qualify as a First Home Savings Account.
- Explain the qualifying conditions to make contributions to a First Home Savings Account.
- Annual contribution limit
- Lifetime contribution limit
- Estimate unused First Home Savings Account contribution room.
- Explain how contributions made to a First Home Savings Account affect unused First Home Savings Account contribution room.
- Explain the carry-forward provisions for unused First Home Savings Account contribution room.
- Identify the deadline by which contributions to the First Home Savings Account are tax-deductible for a given year.
- Determine the tax impact of contributions made to a First Home Savings Account.
- Cash
- Deposit in-kind
- Transfer from another First Home Savings Account (FHSA)
- Transfer from a Registered Retirement Savings Plan (RRSP)
- Transfer from a spousal Registered Retirement Savings Plan
- Transfer from a Register Retirement Income Fund (RRIF)
- Determine how each of these factors may impact the suitability of contributing to a First Home Savings Account:
- Expected cost and time period for qualifying home purchase
- Tax rate at time of contribution
- Liquidity required
- Propensity to draw on savings
- Impact of future withdrawals on government benefits
- Impact on cash flow
- Opportunity cost of contribution
- Evaluate how each of the factors may impact the suitability of contributing to a First Home Savings Account.
- Estimate the tax impact of contributing to a First Home Savings Account.
- Define excess First Home Savings Account contributions.
- Explain the penalty tax imposed by the Canada Revenue Agency on excess First Home Savings Account contributions.
- Calculate the penalty tax that may be imposed by the Canada Revenue Agency based on a First Home Savings Account excess contribution.
- Explain the options available when a cumulative excess contribution for a First Home Savings Account exists.
- Determine how each of these factors may impact the suitability of withdrawing a cumulative excess contribution from a First Home Savings Account:
- Penalty cost of maintaining excess amount in the plan
- Expected rate of return on investments
- Expected time period for First Home Savings Account contribution room to match the value of the excess amount
- Plans for excess amount to be withdrawn
- Evaluate how each of the factors may impact the suitability of withdrawing a cumulative excess contribution from a First Home Savings Account.
- Explain the purposes for which a qualifying withdrawal from the First Home Savings Account may be used.
- Explain how a First Home Savings Account interacts with the Home Buyers’ Plan (HBP).
- Determine the impact of a qualifying withdrawal from a First Home Savings Account.
- To taxable income
- To the ability to claim income tested government benefits and credits
- Determine how each of these factors may impact the suitability of withdrawing from a First Home Savings Account:
- Previous home ownership
- Move-in or occupancy date
- Written agreement to buy or build a qualifying home
- Location of the home
- Equity rights to the property
- Loss of asset growth within the First Home Savings Account
- Cash flow needs
- Evaluate how each of the factors may impact the suitability of withdrawing from a First Home Savings Account.
- Define a qualifying transfer between First Home Savings Accounts or other registered savings plans.
- Estimate the tax impact of transferring capital property into a First Home Savings Account.
- Determine how each of these factors may impact the suitability of transferring capital property into a First Home Savings Account:
- Withdrawal options
- Tax impact
- Evaluate how each of the factors may impact the suitability of transferring capital property into a First Home Savings Account.
- Determine how each of these factors may impact the suitability of transferring capital property out of a First Home Savings Account:
- Cash flow needs
- Withdrawal options
- Evaluate how each of the factors may impact the suitability of transferring capital property out of a First Home Savings Account.
- Define the types of beneficiaries that may be available on a First Home Savings Account.
- Successor holder
- Designated beneficiary
- Identify who may be named as a successor holder of a First Home Savings Account.
- Explain the benefit of being named a successor holder of a First Home Savings Account.
Additional Knowledge Expected of CFP Professionals
- Explain the tax treatment of First Home Savings Account assets upon the death of the account holder.
- Where there is a successor holder named who qualifies for a First Home Savings Account
- Where there is a successor holder named who does not qualify for a First Home Savings Account
- Where there is an individual named as the beneficiary of the First Home Savings Account
- Where the deceased’s estate is named as the beneficiary of the First Home Savings Account
- Identify potential reasons why an individual may choose to transfer capital property from one First Home Savings Account to another First Home Savings Account.
- Breakdown of the holder’s relationship
- Death of a First Home Savings Account holder
- Explain the Canada Revenue Agency’s requirements related to tax-deferred transfers of capital property between First Home Savings Accounts upon the breakdown of a relationship between spouses.
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