Jordan and Kinsley divorced in 2023. By order of a competent tribunal, Jordan must pay 50% of the FMV of his FHSA to Kinsley. At the time of the transfer, Jordan's FHSA had an FMV of $6,000. Both Jordan and Kinsley have existing FHSAs and Jordan did not have an excess FHSA amount at the time of the transfer.

Jordan filled out Form RC723, Transfer from an FHSA to another FHSA, RRSP or RRIF on Breakdown of Marriage or Common-law Partnership and gave it to Kinsley's FHSA issuer. Once the form was completed by Kinsley's and Jordan's FHSA issuers, Jordan's FHSA issuer directly transferred $3,000 to Kinsley's FHSA.

The direct transfer will have no impact on either Jordan's or Kinsley's unused FHSA participation room, and there will be no immediate tax consequences.

Phil and Claire separated in 2023. According to their written separation agreement, Claire is entitled to receive 50% of the FMV of Phil’s FHSA. The agreement did not specify where Claire must put the money she will receive from Phil's FHSA.

When they separated, Phil's FHSA had an FMV of $8,000. Both Phil and Claire have existing FHSAs and neither of them had an excess FHSA amount at the time of the transfer.

Instead of the amount being directly transferred from Phil's FHSA to a registered plan of her own, Claire opts to receive the $4,000 settlement amount in cash. Phil makes a withdrawal of $4,000 from his FHSA on December 2, 2023, and gives $4,000 to Claire. Claire then decides to contribute $2,000 to her FHSA and $1,500 to her RRSP on December 7, 2023. Claire uses the remaining $500 for her upcoming vacation.

As the $4,000 was withdrawn from Phil's FHSA, it is treated as a taxable withdrawal. Phil must include $4,000 as income on his income tax and benefit return for 2023.

The $2,000 contribution to Claire's FHSA is a new contribution that will reduce her unused FHSA participation room. Likewise, the $1,500 that Claire decided to put in her RRSP is a new RRSP contribution, which will reduce her unused RRSP deduction room.

Claire reported $2,000 as a new contribution to her FHSA when she filed her 2023 income tax and benefit return.

Claire also reported $1,500 as a new RRSP contribution on her 2023 Schedule 7 – RRSP, PRPP and SPP Contributions and Transfers and HBP and LLP Activities.

Eric and Ivy divorced on August 11, 2023. By order of a competent tribunal, Eric must transfer 50% of the FMV of all of his FHSAs to Ivy’s FHSA. Both Eric and Ivy have existing FHSAs.

Eric filled out Form RC723, Transfer from an FHSA to another FHSA, RRSP or RRIF on Breakdown of Marriage or Common–law Partnership and gave it to Ivy's FHSA issuer. At the time of the transfer, Eric's FHSAs had an FMV of $18,500. Once the form was completed by Eric's and Ivy's FHSA issuers, Eric's FHSA issuer directly transferred $9,250 (50% of the FMV of all of the property in Eric's FHSAs) to Ivy's FHSA. The transfer was completed on November 14, 2023. Eric had an excess FHSA amount of $10,000 just before the transfer.

Since Eric had an excess FHSA amount at the time of the transfer, the maximum amount that was transferred to Ivy's FHSA without immediate tax consequences was:

• plus $18,500 (Total FMV of all of the property in of Eric's FHSAs just before the transfer)
• –minus $10,000 (Eric's excess FHSA amount just before the transfer)
• =equals $8,500 (maximum amount transferred without immediate tax consequences)

Since Eric was required to transfer $9,250 (50% of the FMV of all of Eric's FHSAs) from his FHSA to Ivy's FHSA, the remaining $750 was treated as both:

• a taxable withdrawal from Eric's FHSA at the time of the transfer, which must be reported as income on Eric's 2023 income tax and benefit return
• a new contribution by Ivy to her FHSA at the time of the transfer

• plus $9,250 (property directly transferred from Eric's FHSA to Ivy's FHSA)
• –minus $8,500 (maximum amount transferred to Ivy's FHSA without any tax consequence)
• =equals $750 (treated as both a taxable withdrawal from Eric's FHSA at the time of the transfer and a new contribution by Ivy to her FHSA at the time of the transfer)

Eric included $750 as income when he filed his 2023 income tax and benefit return.

Since Eric had an excess FHSA amount in the year, he was also required to file a return to report his excess FHSA amount. For more information on the return and when it will have to be filed, go to FHSA taxes payable, assessments, and reassessments.

The $750 treated as a taxable withdrawal from Eric's FHSA would also reduce his excess FHSA amount. For more information on excess FHSA amounts, go to What happens if you contribute or transfer too much to your FHSAs.

Likewise, Ivy reported $750 as a new contribution to her FHSA when she filed her 2023 income tax and benefit return. This $750 reduced Ivy's unused FHSA participation room for 2023.