Lawrence Dufraimont v. Her Majesty the Queen (Informal Procedure), [1994] 2 CTC 2336

O'Connor J.T.C.C.:—

This matter was heard in Toronto, Ontario on July 5, 1994. It is an appeal pursuant to the informal procedure of this Court relative to the appellant’s 1992 taxation year.

Issue

The sole issue is whether the Minister of National Revenue was or was not correct in including in the appellant's income for 1992 an amount of $18,900 which the appellant withdrew from his Registered Retirement Savings Plan (“RRSP”) on June 25, 1992.

The appellant submits that since the $18,900 was used to make a final payment on his new home in Newmarket, Ontario it should qualify an “eligible amount" under the Home Buyers' Plan legislation introduced by the federal government on February 25,1992 and consequently is not to be included in income.

The appellant takes this position notwithstanding that he acquired title to his home on February 20, 1992 and section 146.01 of the Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63) (the "Act") requires that a home. be acquired after February 25,1992 for a withdrawal from an RRSP to qualify as an “eligible amount".

The appellant's sole legal argument is that he did not have complete title to his home until he made his last payment in June of 1992 using the moneys that he withdrew from his RRSP. He points principally to an amendment to the original agreement of purchase and sale which amendment was dated February 14,1992 and reads as follows:

The parties hereto agree that notwithstanding that the purchase price in the attached agreement is $250,000, the purchaser shall deliver to the vendor on closing a promissory note on the vendor's form whereby he agrees to pay to the vendor the sum of $18,900 in addition to the aforesaid purchase price which said sum shall be paid to the vendor on or before June 30, 1992.

The promissory note shall bear interest at the rate of ten per cent per annum.

Provided that in the event the said purchaser fails to pay the said sum, it shall form a charge and lien against the purchased property and shall be enforceable in the same manner as a mortgage in default.

The respondent submits:

1. That the foregoing amendment did not postpone the taking of title nor did it give rise to an encumbrance on the home. An encumbrance or charge would only have come into existence if the $18,900 had not been paid and this was not the case.

2. Section 146.01 is clear. For an eligible amount to exist there are several conditions and one of the main conditions is that the home must be acquired after February 25,1992 and this was not the case.

3. The respondent also points out that paragraph 146.01 (1 )(d) requires that the home cannot be acquired more than 30 days prior to the withdrawal of the RRSP moneys and here again the appellant has failed to comply with this condition.

The respondent also argued that the appellant must fail because he did not receive the RRSP moneys pursuant to a written request in prescribed form T1 03 6. In view of the Court's findings set forth below it is not necessary to address this argument.

The Court is sympathetic to the appellant’s position given the fact that he took title to the home only five days prior to February 25, 1992. However the Court finds it impossible not to accept the respondent's numbered submissions above. Consequently the appeal must be dismissed.

Appeal dismissed.