FHSA, other tax proposals tabled in House of Commons

By Melissa Shin | November 4, 2022 | Last updated on October 27, 2023
3 min read
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The new tax-free first home savings account (FHSA) is one step closer to reality.

Deputy Prime Minister and Finance Minister Chrystia Freeland tabled Bill C-32 Friday to implement proposals from the government’s fall economic statement as well as several outstanding tax and estate-planning proposals from the 2022 federal budget, including the FHSA.

The bill includes a new FHSA provision: it states that any holder carrying on a business in the FHSA will be liable for the associated taxes. Wording in the bill states that the holder is “jointly and severally, or solidarily, liable with the trust to pay” tax attributable to carrying on a business. The issuer’s tax liability would be limited to the property held in the FHSA only. (Editor’s note, Nov. 23: Bill C-32 also stated that the FHSA will come into force on April 1, 2023, and that a homebuyer can use both the FHSA and the Home Buyers’ Plan for the same home purchase.)

The bill also delays the implementation of enhanced reporting requirements for trusts that were first proposed in the 2018 federal budget. The effective date has been pushed to taxation years that end after Dec. 30, 2023, instead of Dec. 30, 2022. This is the second time that the date has been changed since the proposal was introduced.

“This is good news, since it allows time for taxpayers to obtain the required information and for government to provide clarification of the proposed rules,” said Dino Infanti, national leader, Enterprise Tax, with KPMG, in an email.

For example, the rules currently apply to bare trusts, and tax practitioners have expressed concern that clients may have bare trusts without realizing it.

Among other proposals, Bill C-32 also implements the revised anti-flipping rule announced in Thursday’s fall economic statement, as well as:

The investment and tax community is still awaiting further information about how the government intends to proceed with Bill C-208, which concerned “genuine” intergenerational transfers of small businesses, farms and fishing corporations. The issue was last addressed in the 2022 federal budget.

Bill C-32 is at second reading. The House of Commons will sit until Dec. 16 before breaking until the last week of January.

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Melissa Shin

Melissa is the editorial director of Advisor.ca and leads Newcom Media Inc.’s group of financial publications. She has been with the team since 2011 and been recognized by PMAC and CFA Society Toronto for her reporting. Reach her at mshin@newcom.ca. You may also call or text 416-847-8038 to provide a confidential tip.