Turning 18 changes the game
At 18, your child starts getting access to adult tools. Some are powerful. Some are dangerous if used wrong.
This guide is Canada-wide. Ontario-first where helpful. Not legal advice. Use it as a checklist, then confirm anything complex with one of our tax pros or a lawyer.
1) TFSA. Start early. Avoid the one big mistake.
When TFSA room starts
TFSA contribution room starts when your child is 18 or older and is a resident of Canada with a SIN. Even if they do not open an account right away, room can still build up, depending on eligibility. (Canada)
2026 TFSA annual limit
The TFSA dollar limit for 2026 is $7,000. (TD Bank)
The one big mistake. Overcontributions
CRA charges a tax on excess TFSA amounts. It is 1% per month on the highest excess amount for each month it stays in the account. (Canada)
Practical rule: do not contribute until you confirm the child’s exact TFSA room in CRA My Account.
Parent move that works
Gift them cash. Let them contribute themselves. After 18, there is no “minor child” attribution issue. More on this below.
2) FHSA. Best new tool for first home savings. Easy to mess up.
Who can open an FHSA
They generally must be:
- 18 or older
- Resident of Canada
- A first-time home buyer (based on the FHSA definition) (Canada)
Also, in some provinces, the ability to sign a contract may affect when an institution will let them open. CRA notes this practical constraint. (Canada)
FHSA limits
- $8,000 per year contribution limit.
- $40,000 lifetime contribution limit. (Canada)
Important detail. Room starts when they open
FHSA participation room starts in the year they first open an FHSA. It is not like the TFSA where many people think room “always builds.” If you want 2026 room, open in 2026.
Overcontributions also hurt
FHSA has an excess amount tax. It is 1% per month on the excess. (Canada)
Simple parent move
If home ownership is likely in the next 5 to 10 years, FHSA is often the first account to prioritize because it can combine:
- a deduction on contributions, and
- tax-free qualifying withdrawals.
(Confirm their “first-time home buyer” status before you push money into it.)
Important Note on Attribution
In simple words, attribution, in tax terms, means that if you simply ‘give’ money to a related person and they invest it, that investment income will get ‘attributed back’ to the giver instead of being taxed at the hands of the recipient (investor).
So, if you are wondering if you can simply give money to your child to invest in an FHSA, and if that risks income attribution back to you – the answer is: Yes, you can give the money to your child to invest in their FHSA and No, there is no attribution of that income inside FHSA back to you.
The tax deduction on that FHSA will also be claimed by your child, and not by you.
Important Note on Timing of FHSA Deduction
As you may know, FHSA brings the best of RRSP and TFSA – in that contributions are tax deductible and the withdrawals are not taxable – so long as the money is used for your first home.
However, if your child starts the investment into an FHSA account early on (say, soon after 18), we can assume that their income will be fairly low. In that case, they can defer taking the deduction for their FHSA contribution until later years when their taxable income is higher. Sounds like a win-win!
3) RRSP at 18. Usually not first. Sometimes smart.
Earned income is the gate
RRSP contribution room is based on earned income and is calculated after they file a return. CRA generally limits it to 18% of earned income up to the annual maximum. (Canada)
2026 RRSP maximum
For 2026, the RRSP dollar limit is $33,810. (Canada)
When RRSP matters for young adults
RRSP is usually not the first priority if their income is low. It can become useful when they have:
- meaningful earned income, and
- a real tax rate to reduce, and
- no high-interest debt.
Good parent move: still file their tax return early in life. It helps build RRSP room for later.
Again, while deduction for the RRSP contributions can be deferred to later years when taxable income is higher, funds from RRSP can be withdrawn against the RRSP holder’s home under the Home Buyers’ Program.
Helpful guides from our team:
4) File their tax return. Even if they made almost nothing.
This is not optional long term. Filing is how CRA calculates benefits and credits, and tracks things like tuition. (Canada)
Why filing matters at 18
- It creates a tax record and Notice of Assessment.
- It sets up RRSP room based on earned income.
- It allows many credits to be carried forward (like tuition).
GST/HST credit timing
The GST/HST credit is generally for people 19 or older, with limited exceptions (like having a spouse or child). Filing at 18 helps them start receiving it automatically when they qualify. (Canada)
Tuition. Do not waste this.
Your child can transfer up to $5,000 of the current year federal tuition amount to a parent, grandparent, or spouse, but only after they use what they need to reduce their own tax owing to zero. Prior-year carryforwards cannot be transferred.
CRA My Account lets them view and manage tax and benefit information online.
5) CRA My Account. Set it up. Lock it down.
CRA My Account lets them view and manage tax and benefit information online.
Registration basics
Use CRA’s registration process and follow the steps exactly. (Here is How to Sign Up for CRA My Account).
Security basics
Multi-factor authentication is mandatory for CRA accounts. Turn it on. Do not share codes. (Canada)
Scam rule
CRA explicitly lists warning signs. CRA will not pressure immediate payment the way scammers do. Teach your kid to pause, then verify. (Canada)
6) Benefits and family cash flow. What changes for parents
Canada Child Benefit
CCB is for families raising children under 18. Once your child is 18, that child is no longer an eligible child for CCB. (Canada)
This is a real cash flow change for many families. Plan for it.
7) If your child works. Basic tax moves that matter.
Paycheques and slips
If they have a job, they will usually get slips like a T4. Keep them. File with them.
Student deductions and credits
CRA has a student list of common deductions and credits. Use it as the checklist. (Canada)
Student loan interest credit. Watch the reality.
Canada Student Loan interest was permanently eliminated starting April 1, 2023. Many students will have little to no federal loan interest to claim going forward. (CSNPE NSLSC)
But CRA still has rules for claiming interest paid on eligible government student loans if interest exists (for example, older accrued interest, provincial portions, or other eligible loans).
8) Business owners. Hiring your child at 18. Do it right or do not do it.
This is where CRA fights back when people get sloppy.
Step 1. Make it real work
They must actually do work. The work must be documented. The pay must be actually paid. It must make business sense.
Step 2. Pay a reasonable wage
CRA’s business expense guidance is clear. You generally can deduct expenses you incur to earn business income, but you need support and it needs to be reasonable.
Step 3. Decide employee vs contractor
If you misclassify, payroll gets ugly. CRA has an “employee vs self-employed” guide. Use it.
Step 4. Payroll basics at 18. CPP starts.
CPP deductions start in the first pay dated in the month after the employee turns 18.
Step 5. EI may not apply if they are related
Under EI rules, employment with related persons may be non-insurable, meaning no EI premiums, and no EI benefits, unless CRA accepts it as an arm’s length-like job. (Canada)
Step 6. T4. Do not skip it.
If you pay employment income, you will typically need to report it properly (T4 and payroll remittances as required). Use CRA’s employer guide as your base reference. (Canada)
Audit trigger behaviour: large pay with vague duties, no time tracking, no proof, no remittances, no consistency.
9) Gifting and attribution. This is where parents get confused.
The clean rule
Attribution rules target transfers or loans of property to a related minor. CRA explains that attribution generally applies unless the minor attains age 18 before the end of the year. (Canada)
What that means in plain English
- If your child is under 18, gifts for investing can attribute income back to you.
- Once your child is 18, those “minor child” attribution rules generally stop being the issue.
Important nuance: other rules can still apply in other contexts (like TOSI on certain family dividends). If you are planning dividends or complex family planning, get advice before you move money.
10) Banking and credit. Build it slowly.
First credit card
One low-limit card. Autopay full balance. Never carry a balance.
Co-signing
Do not co-sign “to help them build credit” without a clear repayment plan. Co-signing can become your debt fast.
11) Investing basics for new adults.
Simple rules that prevent long-term damage:
- No leverage.
- No options.
- No day trading.
- Automate contributions.
- Use diversified funds or simple portfolios.
- Keep fees low.
If you want to “help,” teach process, not picks.
Parent checklist by timeline
Before 18
- Make sure they have a SIN.
- Teach basic CRA scam awareness.
- Start a simple budget habit.
At 18
- Open CRA My Account and enable MFA.
- Confirm TFSA room before contributing.
- If home ownership is realistic, open FHSA in that calendar year.
First 90 days
- Set up TFSA contributions slowly.
- If they work in your business, set up proper payroll and documentation.
- Start building credit carefully.
First tax season after 18
- File the tax return even if income is low.
- Transfer tuition properly if applicable.
- Review benefit eligibility as they approach 19, including GST/HST credit.
Action checklist
- Confirm TFSA contribution room in CRA My Account before any deposit.
- If FHSA makes sense, open it in the same year you want the $8,000 room to start.
- File the first tax return. Lock in tuition tracking and future RRSP room.
- Teach CRA scam rules. Never click pressure links.
- If hiring your child, run real payroll. Start CPP after they turn 18. Check EI related-person rules.
FAQs
1) Does TFSA room start at 18 in Canada?
Yes. TFSA room starts when someone is 18 or older and a Canadian resident with a SIN.
2) What is the TFSA contribution limit for 2026?
The TFSA dollar limit for 2026 is $7,000.
3) Can an 18-year-old open an FHSA in Canada?
Generally yes, if they are 18 or older, a Canadian resident, and a first-time home buyer under the FHSA definition.
4) What are the FHSA limits?
$8,000 per year and $40,000 lifetime, subject to the FHSA rules.
5) Should an 18-year-old file a tax return if they made little income?
Often yes. It creates the tax record, supports tuition handling, and helps with benefits and credits later.
6) When do CPP deductions start for a child you hire?
CPP deductions start in the first pay dated in the month after the employee turns 18.
7) Do you have to deduct EI if you hire your child in your corporation?
Maybe not. Employment with related persons can be non-insurable under EI rules unless CRA accepts it as arm’s length-like.
8) Can parents gift money to an 18-year-old to contribute to a TFSA or FHSA?
Generally, the “related minor” attribution rules are aimed at minors. Once the child is 18, that specific minor-child attribution concern generally stops being the issue.
Takeaway
If you want this set up cleanly for your family, especially if you own a CCPC or you want to hire your child properly, Think Accounting can help. We handle the tax rules, payroll setup, documentation, and the account strategy so you do not learn the hard way.
