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 Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues:1) Can a person participate in the Home Buyers' Plan (HBP) a second time? 2) Will an amount withdrawn from an RRSP without the Form T1036 being completed qualify for the HBP?
Position: 1) Yes. 2) No.
Reasons: 1) Effective for 1999 and subsequent years, if an individual has repaid all amounts previously received under the HBP and all of the HBP conditions are satisfied, the individual may participate in the HBP a second time. 2) In order to be an eligible amount, an individual has to submit a written request in prescribed form (T1036) in order to withdraw funds tax-free under the HBP.
XXXXXXXXXX 2000-001589
M.P. Sarazin
May 3, 2000
Dear Sir\Madam:
Re: Retroactive Participation in the Home Buyers' Plan
This is in response to your letter of March 24, 2000, in which you asked whether your acquisition of a home in July, 1999 would have qualified for the Home Buyers' Plan ("HBP") and whether the Canada Customs and Revenue Agency (the "Agency") would allow you to participate in the HBP a second time.
In 1993, you and your fiancé purchased a home to raise your families from previous marriages. You helped finance the acquisition of the home by withdrawing amounts out of your registered retirement savings plan ("RRSP") under the HBP. Shortly after moving into the new home with your fiancé, you realized that the arrangement was not going to work and you moved out of the home. You had been unsuccessful in getting your former fiancé to sell the house and you had to walk away from your investment in that home. You still have an HBP balance in respect of this earlier participation in the HBP.
In July 1999, you acquired a home for you and your sons to live in. You wanted to participate in the HBP a second time but your RRSP plan administrator advised you that you did not qualify. In order to finance the purchase, you withdrew amounts from your RRSP and you are now faced with significant taxes owing in respect of the withdrawals. You are of the view that you did qualify to participate in the HBP a second time because you met the first-time home buyer condition. You ask that we review the facts of your situation to determine whether we agree that you qualified to participate a second time in the HBP and whether we would allow you to participate under your extenuating circumstances.
Confirmation of the tax consequences associated with completed transactions are provided by the relevant tax services office. Therefore, we can only provide you with the following general comments.
You will find the Agency's general views regarding the HBP in the Guide titled "Home Buyers' Plan (HBP) - For 1999 Participants" (RC4135). In order to participate in the HBP, an individual has to satisfy several conditions which are described very clearly in the chart found on page 5 of the Guide. We note that all of the conditions have to be satisfied before an individual will be eligible to participate in the HBP. A copy of this guide is available from your local tax services office or on the internet at the following site - http://www.ccra-adrc.gc.ca/formspubs/menu-e.html.
Starting in 1999, if you participated in the HBP in any year from 1992 to 1998, you were able to do so again in 1999 provided your HBP balance on January 1, 1999, was zero (i.e. all previous withdrawals under the HBP had been repaid). Since you had an HBP balance on January 1, 1999, you were automatically disqualified from participating in the HBP in 1999.
A second condition that had to be satisfied before an RRSP withdrawal in 1999 would qualify under the HBP is that a Form T1036 had to be completed for the particular withdrawal. Since you did not complete the Form T1036 for each of your withdrawals that you wanted to qualify for the HBP in 1999, the RRSP withdrawals did not qualify for the HBP.
We regret that our comments could not be more favourable.
Yours truly,
Patricia Spice
for Director
Financial Industries Division
Income Tax Rulings Directorate
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 2000
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 2000
Email this Content