First Home Savings Account (FHSA) terms and conditions

(Investments Restricted to Demand Deposits at Meridian and Term Deposit Certificates issued by Meridian)

Meridian Credit Union Limited (“Meridian”), a credit union having its Head Office at the City of St. Catharines, in the Province of Ontario (hereinafter referred to as the “Issuer”), hereby declares that it accepts the instructions of the Holder as defined in the ITA, to file with the Minister of National Revenue an election to register the qualifying arrangement as an FHSA under section 146.6 of the Income Tax Act (Canada) (the “ITA”) under the Social Insurance Number of the Holder, upon the following terms and conditions:

1. Arrangement: These Terms and Conditions, together with the application as submitted by the Holder (the “Application”), shall constitute the Meridian Credit Union Limited First Home Savings Account and hereinafter shall be referred to as the “FHSA”. Based on the information provided by the Holder, the Issuer and the Holder agree that the FHSA complies with all prescribed conditions. However, the Holder acknowledges that this FHSA is not considered a qualifying arrangement, as that term is defined in the ITA, unless the Holder was at least 18 years of age, a resident of Canada, and did not own and occupy a home in current calendar year or any of the preceding four calendar years, when the Application was signed by the Holder.
   
   The Issuer shall take the necessary steps to file an election with the Minister of National Revenue to register the qualifying arrangement as a First Home Savings Account as defined by the ITA. Contributions received by the Issuer from the Holder for the purpose of being held in the FHSA shall be held by the Issuer in accordance with the provisions of this FHSA, the ITA and any applicable provincial legislation or other law. The ultimate responsibility for the administration of this FHSA lies with the Issuer.
   
   
2. How Contributed Amounts are to be Held: The Holder acknowledges that all amounts contributed to the FHSA shall be held in this FHSA in the form of either demand deposits standing to the credit of the Holder at Meridian or Term Deposit Certificates issued by Meridian (the “Deposits”). The Deposits shall bear interest and be held in accordance with the terms and conditions prescribed by Meridian from time to time for the deposit product(s) selected by the Holder; provided that in the event any such terms and conditions shall conflict with these Terms and Conditions, the provisions of these Terms and Conditions shall be considered paramount.
   
   
3. Limitations on Contributed Amounts: This FHSA prohibits anyone other than the Holder from making contributions under this FHSA. The Holder is responsible for ensuring that the total contributions deposited to or transferred into the FHSA do not exceed the maximum amount allowed by the ITA. The Issuer has no obligation to determine or advise the Holder with respect to the maximum allowable amount. The Holder also acknowledges that in the event he or she becomes a non-resident of Canada, the Holder will still be able to participate normally in their FHSA, however unable to make a qualifying withdrawal.
   
   
4. Over Contributions: The Holder acknowledges that any excess contributions over the maximum allowable amount are subject to tax at the rate prescribed by the Minister of National Revenue from time to time, for each month that the excess remains in the FHSA.
   
   
5. Transfers: At the direction of the Holder, the Issuer shall transfer all or any part of the Deposits held in connection with the FHSA (or an amount equal to its value) to another FHSA of the Holder, or an RRSP or RRIF of which the Holder is the Annuitant. On the breakdown of a marriage or a common-law partnership, the Holder may also directly transfer an amount from this FHSA to the FHSA, RRSP or RRIF of the Holder’s Spouse (if the transfer is to an FHSA, the Spouse must be a “qualifying individual”). The Holder may be required to delay finalizing a transfer until the expiry date of the investment term of a fixed rate deposit.
   
   
6. Ability to Grant Security Interests in Deposits to the Issuer: The Holder may not use its interest or right in the FHSA as security for a loan or other indebtedness without the prior written consent of the Issuer. Without restricting the Issuer’s discretion to refuse to consent to such use for other reasons, consent will not be given unless,
   
   a) the terms and conditions of the indebtedness are those which persons dealing at arm’s length with each other would have entered into; and
   b) it is reasonable to conclude that none of the main purposes for such use is to enable a person (other than the Holder or a partnership in which the Holder is a partner) to benefit from the exemption from tax provided by the FHSA.
   
   If consent is given, to the extent that the provisions of Sections 5 and 16 hereof are inconsistent with using an interest or right in the FHSA as security for a loan or indebtedness, they will not apply.
   
   
7. Tax Payable on Advantage: In accordance with the section 207.05 of the Income Tax Act (Canada) the controlling individual of the FHSA is liable to pay a tax for a calendar year if, in the year, an advantage in relation to the FHSA is extended to, or is received or receivable by, the controlling individual, a trust governed by the controlling individual, or any other person who does not deal at arm’s length with the controlling individual, unless the advantage was extended by Meridian or a person with whom Meridian is not dealing at arm’s length.
   
   
8. Designation of Successor Holder: For the purposes of the ITA only, the Holder is permitted to name his or her spouse or common-law partner (“Spouse”) as a successor holder of the FHSA (“Successor Holder”). However, any right of the person so designated to become the owner of the FHSA upon the death of the Holder is determined and governed by provincial legislation and regulations, The Legislature of Ontario may not have enacted or passed enabling legislation or regulations as of the date the Holder signed the application for the FHSA. Provincial legislation or regulations may override this designation, or retroactively validate this designation. If, by operation of provincial law, the designated Successor Holder does become the owner of this FHSA, the Successor Holder will be able to maintain the tax-exempt status of this FHSA without reducing the Successor Holder’s own personal contribution room for his or her own FHSA. The Successor Holder must also be a qualifying individual. These provisions do not apply to Quebec Residents.
   
   
9. Designation of Beneficiary: Designation of Beneficiary: Beneficiary refers to any individual (including an estate) or a qualified donee (e.g., a registered charity) who will receive the proceeds of a FHSA after the death of the holder. Any designation of beneficiary shall be made, changed or revoked only by a Will, or by a written instrument in a form authorized by Provincial law and acceptable to the Depositary, and which clearly identifies the FHSA. The Issuer shall act in accordance with the Will or the instrument designating the beneficiary, whichever bears the latest execution date, subject to the requirements of applicable Provincial law. These provisions do not apply to Quebec Residents.
   
   
10. Withdrawals: The Holder is permitted to make qualifying withdrawals from the FHSA in the manner prescribed to the Holder by the Issuer. The Holder may be required to delay finalizing a withdrawal until the expiry date of the investment term of a fixed rate deposit. However, in any event, upon receipt of the Holder’s written application, the Issuer will refund to the Holder the amount determined in accordance with Paragraph 146.6(2)(d) of the ITA.
    
    
11. Qualifying Withdrawals: Withdrawals used to complete a first home purchase for an amount received our of the FHSA. To complete a qualifying withdrawal, all of the following conditions must be met:
    
    a) the Holder must be a first-time homebuyer at the time the Holder receives the withdrawn amount. This means that the Holder cannot have owned a home in any part of the calendar year before the effective date of the withdrawal or in the preceding four calendar years, unless the withdrawal occurs within 30 days following the date the Holder moved into the purchased home;
    b) the Holder must have entered into written agreement of purchase and sale of the home to be purchased prior to October 1 of the calendar year following the effective date of the withdrawal; and
    c) the Holder must declare a firm intention to live in the qualifying first home (a housing unit located in Canada) as the Holder’s principal residence for at least one year after the later of the date of purchase and the date of completion (if its construction is not complete on the date of purchase).
    
    
12. Qualifying Individual: In order to open an FHSA, an individual must meet the following criteria to be deemed eligible. A qualified individual is a person who meets all of the following eligibility requirements at the time the account is opened:
    
    a) Is between the ages of 18 and 71;
    b) A resident of Canada at the time of purchase;
    c) Has a Valid Social Insurance Number;
    d) Is a first-time home buyer;
    e) The individual cannot have owned a home in any part of the calendar year before the effective date of the withdrawal or in the preceding four calendar years that they owned or jointly owned or their spouse or common-law partner (at the time the account is opened) owned or jointly owned.
    
    
13. Qualifying Home: A qualifying home is a housing unit located in Canada. This includes existing homes and those being constructed. Housing units that qualify are:
    
    a) Single-family homes
    b) Semi-detached homes
    c) Townhouses
    d) Mobile homes
    e) Condominium units
    f) Apartments in duplexes, triplexes, fourplexes, or apartment buildings
    g) A share in a co-operative housing corporation that entitles you to own and gives you an equity interest in a housing unit
    
    
14. Amendments to the FHSA: The Issuer may from time to time amend the FHSA, provided that notice of such amendment is promptly given to the Holder and such amendments are not contrary to the provisions of the ITA and any amendments and any regulations thereunder, and, if applicable, any provincial laws governing this FHSA. In the event of changes to any applicable legislation covering your FHSA, this FHSA shall be amended, without notice to you, to ensure that your FHSA continues to comply with all applicable legislation.
    
    
15. Mailed Notices: Any notice given to the Issuer hereunder shall be sufficiently given if made, postage prepaid, addressed to the Issuer at any of its offices and shall be deemed to have been given on the date that such notice is received by the Issuer. Any notice, statement or receipt given by the Issuer to the Holder shall be sufficiently given if mailed, postage prepaid, addressed to such Holder at the address of the Holder set out in the attached Application for this FHSA, unless the Holder has notified the Issuer of a new address, in which case notice shall be addressed to the Holder at the last address for such purposes so notified and shall be deemed to have been given on the date of mailing.
    
    
16. Other Conditions and Administration Fees: The Issuer will maintain the FHSA for the exclusive benefit of the Holder. The arrangement prohibits, while there is holder of the arrangement, anyone that is neither the Holder nor the issuer of the arrangements from having rights under the arrangement relating to the amount and timing of distributions and the investment of funds. The Issuer may impose service charges from time to time at its discretion for the operation of this FHSA and may debit any account of the Holder, including this FHSA, for payment of same.
    
    
17. Issuer’s Liability:The Issuer shall not be liable for loss or diminution of the Holder’s investments held under this FHSA, except due to its negligence, willful misconduct or lack of good faith. The Holder hereby accepts these Terms and Conditions upon execution of the Application, and in consideration of the contributions he or she has committed to make to the FHSA. The Issuer hereby accepts these Terms and Conditions and in witness thereof, the Issuer as signed under the hand of its duly authorized officers on its behalf at St. Catharines in the Province of Ontario, Canada.
    
    
18. Use of the FHSA in Conjunction with an RRSP Home Buyers’ Plan (“HSP”): The Holder is permitted to make both an FHSA withdrawal and an HBP withdrawal for the same qualifying home purchase.
    
    
19. Maximum Participation Period: The maximum participation period begins when an individual opens their first FHSA and ends on December 31st of the year in which the earliest of the following events occurs:
    
    a) the FHSA reaches the 15th year anniversary of the date of the opening of the Holder’s first FHSA;
    b) the Holder’s 71st birthday; and
    c) the following calendar year of a qualifying withdrawal from the FHSA.
    
    
20. Termination (Closing the FHSA):The FHSA must be terminated by December 31 in the calendar year in which the earliest of the following events occurs:
    
    a) the FHSA reaches the 15th year anniversary of the date of the opening of the Holder’s first FHSA;
    b) the Holder’s 71st birthday; and
    c) the following calendar year of a qualifying withdrawal from the FHSA. The Holder hereby acknowledges that he or she shall be conclusively deemed to have given irrevocable instructions to the Issuer to close the account in the event the Holder has not given timely separate instructions to do so in compliance with this requirement.
    
    
21. Resignation: The Holder agrees that the Issuer may resign its position as Issuer of the FHSA by giving to the Holder at least thirty (30) days’ prior notice of its intention to do so. In the event of the Issuer’s resignation, the Holder shall appoint a successor issuer or trustee that is acceptable to the Issuer. The Issuer shall then deliver the proceeds of the deposits in the FHSA and the records relating thereto to the replacement issuer or trustee, and shall execute such deeds and assurances and do such things as may be required in order to ensure the continued and uninterrupted operation of the FHSA. In the event that the Holder neglects or refuses to appoint a successor issuer or trustee acceptable to the Issuer, the Issuer reserves the right to transfer the proceeds of the FHSA to the Holder and treat the payment as a withdrawal by the Holder from the FHSA.
    
    
22. Record Keeping: The Issuer will record the details of all contributions to the Holder’s FHSA, their investment in deposits, and of all payments from the FHSA. The Issuer will supply to the Holder a statement of this information at least annually. The Issuer will complete the regulatory reporting required under the ITA.
    
    
23. Execution: This Agreement may be executed in several counterparts or (with the exception of the Successor or Beneficiary Designations, where applicable) electronically. When executed in counterparts, each counterpart shall be deemed to be an original and such counterparts together shall constitute one and the same instrument and notwithstanding the date of execution shall be deemed to bear date as of the date written below. When executed electronically, use of the services described in the Agreement shall be deemed to be acceptance of the terms and conditions hereof as of the date of first use.