CRA indicates that an HBP balance is not zeroed through a contribution to repay the balance until the applicable return designation is made

As part of the rules for allowing an individual to participate in a home buyers’ plan (HBP) in more than one calendar year, individuals can have a fresh participation period in which they can make a further HBP withdrawal from their RRSP if they have contributed amounts to their RRSP that are designated to be non-deductible HBP repayments, so as to reduce their “HBP balance” to nil. In particular, in order for a withdrawal from their RRSP to qualify as a “regular eligible amount,” para. (i) of the definition thereof requires the individual’s HBP balance at the beginning of the withdrawal year be nil.

An individual, who had an HBP balance of $5,000 at the beginning of Year 1, contributed $5,000 to his RRSP on May 7 of that year to repay that HBP balance. On March 25 of Year 2, when filing his T1 return for Year 1, he designated (on Sched. 7 to the return) that contribution as an HBP repayment for Year 1.

CRA indicated that it was only on the return filing date when he made such designation that his HBP balance as at the beginning of Year 2 was reduced to nil, so that he was required to wait until that date before being again able to participate in the HBP.

Neal Armstrong. Summary of 10 October 2024 APFF Financial Strategies & Instruments Roundtable, Q.11 under s. 146.01(1) – HBP balance.