Did you open an FHSA last year? Why your tax refund might be delayed

Click to play video: 'RRSP? FHSA? What you should contribute to before tax season deadlines'
RRSP? FHSA? What you should contribute to before tax season deadlines
With the deadline for contributions to tax-deferred savings accounts approaching on Feb. 29, prospective homeowners may be weighing the pros and cons of contributing to a registered retirement savings plan (RRSP) versus tax-deductible contributions to the relatively new first home savings account (FHSA). But many Canadians indicate they’re feeling stretched when it comes to saving at all – Feb 10, 2024

Some Canadians who opened a first home savings account (FHSA) in 2023 have faced delays getting their tax return processed by the Canada Revenue Agency, a government spokesperson confirmed to Global News.

Multiple users posting on Reddit earlier this week reported delays of three weeks or more in getting their notices of assessment from the CRA. In threads on the social networking site, users’ experiences coalesced around having opened an FHSA in 2023.

The FHSA is a new registered savings vehicle with major tax implications for Canadians looking to purchase a home. Contributions are tax deductible, meaning any money put into the FHSA can be counted against taxable income for the year, and are also tax-free when withdrawn toward a down payment on the purchase of a home.

Marianne Dandurand, director of communications for Marie-Claude Bibeau, the minister responsible for the CRA, confirmed to Global News on Wednesday that there was a delay in processing tax returns related to the FHSA. But she added that the issues should now be resolved.

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“As can sometimes be the case with new initiatives at the beginning of tax season, the CRA encountered some processing issues with tax returns including a FHSA,” she said in a statement.

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“The issue was identified immediately by the CRA teams, who worked diligently to fix it. It is now confirmed that the issue has been resolved and Canadians with an FHSA should expect everything to be back to normal shortly.”

Click to play video: 'Reality checking how First Home Savings Account will benefit potential homebuyers'
Reality checking how First Home Savings Account will benefit potential homebuyers

After this story’s initial publication, some Reddit users were reporting on the same threads that their notices of assessment were now flowing in.

A spokesperson for the CRA told Global News in a statement that the agency aims to issue Canadians a notice of assessment within two weeks after a tax return is filed. The CRA hit this goal for 96 per cent of on-time digital filers in the 2022 income tax season, according to the statement.

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“In certain cases, it will take longer than our two-week service standard to process a tax return and we regret any inconvenience that this may cause. We continue to work to resolve these cases as quickly as possible, including those tax returns that may be reporting FHSA information,” the spokesperson said.

The FHSA was meant to launch April 1, 2023 after the federal government introduced the new account in the previous year’s budget. But most financial institutions were late offering the savings vehicle to customers.

As of the start of 2024, more than 500,000 Canadians had opened an FHSA, according to Finance Canada.

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