Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
Principal Issues: Can a tax free withdrawal from an individuals RRSP be made within 30 days of a purchased home becoming habitable?
Position: No if the withdrawal occurs more than 30 days after the purchase of the home.
Reasons: Paragraph (d) of the definition of "regular eligible amount" as defined in subsection 146.01(1) of the Act requires that the withdrawal must occur no more than 30 days after the individual or the individual's spouse acquired the home.
2002-012262
XXXXXXXXXX Karen Power, CA
(613) 957-8953
March 5, 2002
Dear XXXXXXXXXX:
Re: Home Buyers' Plan
This is in reply to your facsimile of February 8, 2002, requesting our comments on whether an individual who purchases a home that is not habitable and then renovates the home may participate under the Home Buyers' Plan and withdraw an amount from their registered retirement savings plan ("RRSP") once the home becomes habitable.
Written confirmation of the tax implications inherent in particular transactions are given by this Directorate only where the transactions are proposed and are the subject matter of an advance ruling request submitted in the manner set out in Information Circular 70-6R4 entitled Advance Income Tax Rulings, dated January 29, 2001. Where the particular transactions are completed, the enquiry should be addressed to the relevant tax service office. The following comments are, therefore, of a general nature only and are not binding on the CCRA.
In order to participate under the Home Buyers' Plan and withdraw an amount from your RRSP that will not be subject to income tax, the amount withdrawn must be a "regular eligible amount" as defined in subsection 146.01(1) of the Income Tax Act (the "Act"). Paragraph (d) of that definition states that the withdrawal must occur no more than 30 days after the individual or the individual's spouse acquired the home.
There is no discretion under the Act to waive this requirement. Where an individual purchases a home that is not habitable, renovates the home and withdraw funds from his or her RRSP under the Home Buyers' Plan once the home becomes habitable which is more than 30 days after the individual or their spouse has acquired the home, the withdrawal will not be a "regular eligible amount" within the meaning assigned by subsection 146.01(1) of the Act and the amount would be required to be included in income.
We trust our comments will be of assistance to you. These comments are provided in accordance with the practice outlined in paragraph 22 of Information Circular 70-6R4.
Yours truly,
Mickey Sarazin, CA
for Director
Financial Industries Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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