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The Liberal government’s marquee tax-free First Home Savings Account (FHSA), intended to help new homebuyers break into the market, saw roughly 600,000 people open an account in its first year, but most did not come close to depositing the full eligible amount, according to documents tabled in the House of Commons.

The Canada Revenue Agency reported that the average FHSA balance in 2023 was $3,792, although the maximum tax-free eligible annual amount is $8,000 (with a lifetime maximum of $40,000). The median deposit for 2023 was $2,040.

A total of $2.37 billion now sits in the new home savings accounts, according to CRA data, which was provided in response to an order paper question by Conservative MP Dan Albas.

The FHSA was first announced in the 2022 budget, but got up and running in 2023. According to the CRA data provided, 624,970 people had active accounts as of the end of 2023.

Among people who opened an account, 272,340 had deposited between $5,000 and $10,000.

There were 66,120 people who deposited between $1,000 and $5,000.

The CRA also revealed that 920 people put in more than $10,000 and 50 people put in more than $20,000. (Money deposited into the account is tax deductible and account earnings and withdrawals are tax-free, but any money deposited over the annual maximum triggers a penalty for the account holder.)

The order paper question did not ask how many people deposited less than $1,000, but the number of people not included in the above categories suggests that about half of account holders had deposited less than $1,000.

Order paper questions allow MPs to ask specific questions of the government in writing and receive detailed answers.

The CRA also reported that 194,200 of account holders made less than $53,359 in 2023, while 154,400 account holders earned between $53,359 and $106,717.

Just over 33,000 people with 2023 earnings higher than $106,717 made a contribution to an FHSA.

The CRA noted it compiled the income data 10 days before last month’s tax-filing deadline, which means not all tax filers would have submitted their earnings by then, so only incomplete income data were available.

Finance Minister Chrystia Freeland has frequently celebrated the FHSA program as a big help for first-time homebuyers, even as recently as this week in the House of Commons when she accused the Conservatives of wanting to eliminate it.

“They want to cut the First Home Savings Account that has allowed more than 750,000 young Canadians to save up for their first home. They want to cut support for the infrastructure that is allowing municipalities to build homes. They want to tear Canada down, but we will not let them,” she said during question period on Tuesday.

Source: National Post