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Overview
When you take money out of your FHSA, there are rules and processes that the CRA requires us to follow. Also, the reason you withdraw from your FHSA impacts how the CRA treats your withdrawal for income tax purposes.
Taxable (non-qualifying) withdrawals are withdrawals for purposes other than to purchase your first home. Your withdrawn amount is subject to income tax withholding.
If you over-contributed to your FHSA, you can consider making a designated withdrawal or transfer to remove the excess amount without paying withholding tax.
Make a taxable FHSA withdrawal
Follow these steps to make a non-qualifying withdrawal:
- Log in to the Wealthsimple app
- Select an FHSA
- Tap Transfer
- Select an account to deposit the funds into
- Tap Next
- Choose Another reason (Taxable)
- Tap Next
- Follow the prompts to make a non-qualifying withdrawal from your FHSA
- Log in to your Wealthsimple profile
- Select an FHSA
- Tap Transfer money
- Select an account to deposit the funds into
- Choose Another reason (Taxable) as the Withdrawal reason
- Follow the prompts to make a non-qualifying withdrawal from your FHSA
Multiple withdrawals
Per Canada Revenue Agency’s (CRA) general anti-avoidance guidance, where it appears that an annuitant is making separate taxable withdrawals from an RRSP/FHSA/RRIF/LIF to minimize the income tax withheld, for example, where a series of requests are made in a short period of time, it is the CRA's position that the withholding rate should be determined as if multiple withdrawals were combined into a larger lump sum. Thus, a higher withholding tax rate could apply.
Withholding tax thresholds
We'll automatically deduct the holding tax from your withdrawal and pay it to the government. The amount of withholding tax we send depends on which province you live in.
| If you withdraw: | Withholding tax rate (excluding Quebec): | Withholding tax rate (Quebec residents): |
|---|---|---|
| Up to $5,000 | 10% | 19% (5% Federal + 14% Provincial) |
| Between $5,001 and $15,000 | 20% | 29% (10% Federal + 19% Provincial) |
| More than $15,001 | 30% | 34% (15% Federal + 19% Provincial) |
Withdrawal timelines
The time it takes to receive your withdrawn funds depends on:
- the settlement period for any new deposits (5 business days) and
- the withdrawal timeline for your specific account type (managed or self-directed). Learn more about withdrawal timelines.
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