Canada's FHSA favours high earners
- The Canadian Tax Observatory said April 14 that Canada’s First Home Savings Account is disproportionately helping higher-income Canadians, arguing the tax break now rewards households that likely would have bought homes anyway. - Its analysis says most First Home Savings Account contributors earn more than C$80,000, while people making over C$250,000 contribute the most per account and often hit the C$8,000 annual maximum. - The critique lands as Ottawa’s housing tax breaks face wider scrutiny, with the observatory estimating the FHSA costs about C$1.6 billion a year federally. (canadiantaxobservatory.ca)
Canada’s First Home Savings Account is increasingly benefiting higher-income Canadians, not the first-time buyers it was sold to help. (canadiantaxobservatory.ca) The Canadian Tax Observatory released that assessment on April 14, 2026, after reviewing early First Home Savings Account data with economists from the Centre for the Study of Living Standards. (canadiantaxobservatory.ca) The account, launched in 2023, lets eligible first-time buyers deduct contributions from taxable income and later withdraw money tax-free for a qualifying home purchase. The Canada Revenue Agency says annual contribution room starts at C$8,000. (canada.ca) That mix gives the plan the two features savers usually want most: a tax break going in and no tax on qualified withdrawals coming out. Heather Scoffield, the observatory’s chief executive, said that generosity has turned it into “a mainstream tax shelter for anyone with extra cash.” (canadiantaxobservatory.ca) The observatory said most contributors earn more than C$80,000 a year, above Canada’s individual median income. It said people earning more than C$250,000 contribute the most per account, often maxing out the annual limit. (canadiantaxobservatory.ca) Its argument is that households with enough spare cash to fill these accounts are also the households most likely to buy anyway, with or without a new tax incentive. The report says affluent families can also use the account to pass housing advantages to their children. (canadiantaxobservatory.ca) The observatory also tied the policy to public cost. It estimated the FHSA reduces federal revenue by about C$1.6 billion a year, with provinces losing several hundred million dollars more. (canadiantaxobservatory.ca) It placed the FHSA inside a larger housing-tax system that it says is already expensive and tilted toward demand. The group said nine federal housing tax expenditures together cost about C$17 billion in foregone revenue. (canadiantaxobservatory.ca) (publications.gc.ca) In a supply-constrained market, the observatory said, subsidizing buyers can push in the wrong direction by adding purchasing power without adding homes. Its housing research page says more savings from affluent families flowing into tax shelters carries “a cost to everyone else.” (canadiantaxobservatory.ca) Scoffield repeated that case in a column republished by the observatory on April 25 after first appearing in the Toronto Star on April 15. She argued the First Home Savings Account “has lost the plot” and should be reconsidered alongside other housing tax incentives. (canadiantaxobservatory.ca) The account still works as designed for Canadians who are both eligible and realistically close to buying. The new dispute is over who can actually afford to use it — and who gets the tax break when they can’t. (canada.ca) (canadiantaxobservatory.ca)
