An FHSA balance that will not be used for a qualifying home purchase can generally be transferred directly to your own RRSP or RRIF without immediate tax, subject to the transfer rules. For a normal eligible transfer with no excess FHSA amount, it does not use RRSP contribution room and does not create a new RRSP deduction.
The word "directly" matters. The receiving account, documentation and transaction path should be settled before money moves.
Arrange it through the institutions
Ask the issuer to process an FHSA-to-RRSP or FHSA-to-RRIF direct transfer. Form RC721 can be used; institutions may use their own acceptable transfer documentation. Keep confirmation identifying both accounts, the amount and the transfer date.
For example, a person with a $14,000 FHSA balance and no excess amount should not assume they need $14,000 of unused RRSP room for an eligible direct transfer. They should instead verify that the planned transaction satisfies the direct-transfer conditions.
Avoid recreating it through chequing
Withdrawing money personally and then making an RRSP deposit is a different sequence. The FHSA withdrawal may be taxable, and the RRSP deposit may use contribution room. The two transactions do not become a direct transfer because their amounts match or they happen on the same day.
If an excess FHSA amount exists, ordinary transfer treatment has limits and the correction rules need review. Tell the issuer about it rather than treating a transfer as an automatic cure.
Keep the destination's rules in mind
Money transferred into an RRSP or RRIF becomes subject to that plan's rules. A later withdrawal is not protected by its earlier FHSA history. Age limits and the deadline for closing the FHSA should be checked before choosing the destination.
Retain the transfer confirmation with the T4FHSA and the account-closing record. Together they explain why the transaction was not an ordinary taxable cash withdrawal.
