If you make a payment out of a first home savings account (FHSA) and the payment must be included in calculating the individual's income for the year in which the payment is received, you must make a source deduction of income tax on the payment at the rate applicable to single payments, that is:

• 14% if the amount paid is $5,000 or less
• 19% if the amount paid is more than $5,000

Transfer of amounts

Do not withhold income tax on a single payment out of an FHSA that is transferred directly to another FHSA, or to a registered retirement savings plan (RRSP) or a registered retirement income fund (RRIF) if the following conditions are met:

• The amount is transferred on behalf of an individual who is:
  • the FHSA holder,
  • the FHSA holder's spouse or former spouse (if the spouse or former spouse is entitled to the amount under a decree, order or judgment of a competent tribunal, or under a written separation agreement, relating to a partition of property in settlement of rights arising out of, or on a breakdown of, the FHSA holder's and their spouse's or former spouse's union),
  • the FHSA holder's spouse immediately before the holder's death (if the spouse is entitled to receive the amount on the holder's death).
• The amount transferred, other than to another FHSA of the holder, does not exceed the total fair market value of the FHSA immediately before the transfer minus any excess FHSA amount at the time of the transfer.

If only a portion of the FHSA is transferred, you must withhold income tax on the portion that was not transferred directly.