FHSA Tax Savings on Every Paycheque: Payroll Contributions and Form T1213
Your FHSA deduction can lower the tax taken off each pay in 2026: through payroll FHSA contributions, or a yearly Form T1213 request reviewed by the CRA.
Contributions to a First Home Savings Account (FHSA) are tax-deductible, but most savers only see that deduction as a refund the following spring. In the meantime, their employer keeps withholding income tax as if the contributions did not exist. You can change that timing: the Canada Revenue Agency (CRA) lets an employer reduce the tax withheld from your pay, either through payroll FHSA contributions or with a Form T1213, Request to Reduce Tax Deductions at Source.
Neither route creates a bigger deduction. They move the tax savings from your spring refund into each paycheque, which can make a regular down payment savings plan easier to keep up. Here is how each option works in 2026, and where the limits are.
As of November 2026, an FHSA contribution your employer withholds from your pay and deposits for you automatically reduces the pay on which income tax is calculated, according to the CRA. If you contribute on your own, you can ask the CRA to approve lower withholding with Form T1213, a request that must be renewed every year.
Option 1: FHSA contributions made through payroll
The simplest route runs through your employer. According to the CRA's Employers' Guide on payroll deductions (T4001), an FHSA contribution an employer withholds from your pay and makes on your behalf automatically reduces the remuneration on which tax is deducted. It applies whether the payment is periodic or a lump sum.
There is one condition: your employer must have reasonable grounds to believe you can deduct the contribution for the year. The CRA generally accepts your written confirmation, or a copy of the FHSA participation room statement from your notice of assessment. No separate CRA letter is needed.
Not every employer offers this. Ask your payroll or HR team whether they can send part of each pay to an FHSA in your name.
Option 2: Form T1213 when you contribute on your own
If you contribute to an FHSA at your own bank or brokerage, your employer cannot lower your withholding on its own. It needs a letter of authority from the CRA, and Form T1213 is how you ask for one.
The T1213 covers any deductions, credits or non-refundable tax credits that are not included on Form TD1. The FHSA is not named on the 2026 form: it would go on the line for another deduction, with supporting documents. The CRA reviews each request to confirm the deduction will generate a refund based on your income for the year, so approval is not automatic.
| Criterion | Payroll FHSA contributions | Form T1213 |
|---|---|---|
| Who starts it | Your employer withholds the contribution and deposits it for you | You send the form to the CRA |
| CRA approval | Not needed: the employer needs reasonable grounds to believe the contribution is deductible | Needed: the CRA reviews the request, then sends a letter of authority |
| FHSA named by the CRA | Yes, in the Employers' Guide (T4001) | No: claimed as another deduction |
| How often | Applies to each contribution withheld from pay | A new request every year |
What the CRA expects before it approves
The form sets out conditions that apply to every request.
- Returns filed and assessed: your income tax and benefit returns for previous years are filed, and the CRA has assessed them
- Nothing owing: you have paid any amounts owing in full
- Complete form: all 4 parts are filled out, since an incomplete form may delay processing
- Supporting documents: attached for each deduction you claim, such as proof of your FHSA contributions
- Yearly renewal: a new request every year, because the CRA must confirm the deduction will generate a refund based on that year's income
How to send your request
You can submit Form T1213 online through My Account, using the Submit documents service, or by mail or fax to the Sudbury Tax Centre. Keep the original supporting documents. Once approved, the CRA sends a letter of authority, and your employer applies it to your pay.
If you also make RRSP contributions outside payroll, the same form has a dedicated line for them. Our RRSP guide explains how that deduction works.
If you live in Quebec
Form T1213 deals with federal income tax. Quebec income tax withheld at source is handled by Revenu Québec, which has its own form, the TP-1016, for deductions not shown on Form TP-1015.3. See Revenu Québec's Form TP-1016-V page before you plan on both reductions.
FHSA limits that still apply
A lower withholding only makes sense if the deduction is real. According to the CRA's page on FHSA participation room, these limits apply:
- Participation room in the year you open your first FHSA: $8,000
- Lifetime FHSA limit: $40,000
- Maximum participation period: ends on December 31 of the year of the 15th anniversary of your first FHSA, or the year you turn 71, whichever comes first
Your FHSA works alongside the other first-time home buyer programs in Canada, and it can cover a good part of the down payment you need. For other CRA dates, see our list of key tax deadlines in Canada, or browse all our tax guides. If you park your FHSA savings in cash, compare the best savings accounts in Canada for rates.
Bottom Line
Ask your employer first: payroll FHSA contributions lower your withholding with no CRA paperwork. If that is not offered, file a Form T1213 with your supporting documents, and send a new one every year. Quebec residents need a separate TP-1016 for provincial tax. To get updates like this every week, sign up for our newsletter.