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 an ex-spouse repay the other spouse's HBP and this payment be designated as a HBP repayment.
Position: No you cannot transfer the repayment requirements.
Reasons: Legislation states repayment has to be made by individual who withdrew amount and that the individual has to be the annuitant of the RRSP.
XXXXXXXXXX 2002- 015591
M. P. Baldwin, CA
September 17, 2002
Dear XXXXXXXXXX:
Re: Home Buyers' Plan and Compliance with a Court Ordered Settlement
This is in reply to your letter of July 18, 2002, sent to the Surrey Tax Services Office and forwarded to this Directorate, concerning the repayment requirements under the Home Buyers' Plan ("HBP") and compliance with a court ordered settlement.
The particular situation outlined in your letter appears to relate to a factual one, involving specific taxpayers. As explained in Information Circular 70-6R5, it is not this Directorate's practice to comment on proposed transactions involving specific taxpayers other than in the form of an advance income tax ruling. However, we are prepared to offer the following general comments, which may be of assistance to you.
Enclosed with your letter was a copy of the court ordered settlement. In particular, this settlement contains the following term:
"XXXXXXXXXX"
Our View
XXXXXXXXXX
The HBP is a program that allows an individual to withdraw up to $20,000 from the individual's RRSP to buy or build a qualifying home. Withdrawals that meet all applicable HBP conditions do not have to be included in the individual's income, and the individual's RRSP issuer will not withhold tax on these amounts.
Under the HBP, the individual has to repay all withdrawals to their RRSP within a period of no more than 15 years. Generally, the individual will have to repay an amount to their RRSP until he/she has repaid all of the amount he/she withdrew. If the individual does not repay the amount due for a particular year, this amount will be included in the individual's income for that year.
As explained in Chapter 2 of the Home Buyers' Plan pamphlet (copies of this and other publications are available at the following internet site: http://www.ccra-adrc.gc.ca/tax/technical/incometax/menu-e.html), there are certain contributions which will not be considered repayments under the HBP. In particular, it notes:
"Contributions you cannot designate - not all contributions you make to your RRSPs in the repayment year or in the first 60 days of the following year can be designated as a repayment under the HBP. You cannot designate contributions that:
- you make to your spouse's RRSPs (or that your spouse makes to your RRSPs); ..."
Pursuant to subsection 146.01(3) of the Income Tax Act (the "Act"), the individual must designate HBP repayments for a taxation year in prescribed form filed with their income tax return for the year. One of the requirements in subsection 146.01(3) of the Act is that the amount designated has to be paid by the individual in the year or within 60 days after the end of the year under a retirement savings plan that is at the end of the year or the following taxation year an RRSP under which the individual is the annuitant.
Based on the above analysis, only the individual who withdrew an amount under the HBP can make repayments to their RRSP under which he/she is the annuitant and have these amounts designated as repayments under the HBP. Consequently, in your case, there is no provision in the Act which would allow the Plaintiff to repay the Defendant's HBP balance and allow the Defendant to designate this payment as a HBP repayment.
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 70-6R5.
Yours truly,
Roberta Albert, CA
for Director
Financial Industries Division
Income Tax Rulings Directorate
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