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.
Principal Issues: Does clause (i) of paragraph (f) of the definition of "regular eligible amount" in subsection 146.01(1) of the Income Tax Act bar a common-law partner from withdrawing funds under a home buyers' plan when the other common-law partner had a owner-occupied home in the period described in paragraph (e) of that definition?
Position: Depends on the facts. In this particular fact situation clause (i) of paragraph (f) of the definition of "regular eligible amount" is not a bar to the withdrawal under the home buyer's plan.
Reasons: The proposed definition of "common-law partner" and "regular eligible amount".
July 16, 2013
Sheila Barnard Income Tax Rulings Directorate
Manager Business and Employment Division
Legislation Section Nancy Shea-Farrow
Individual Returns 905-721-5099
Directorate
2013-049401
Home buyer's plan
This is in response to your e-mail on June 21, 2013 asking if clause (i) of paragraph (f) of the definition of "regular eligible amount" in subsection 146.01(1) of the Income Tax Act (the "Act") would bar a common-law partner from withdrawing funds under a home buyers' plan ("HBP") when the other common-law partner had a owner-occupied home in the period described in paragraph (e) of that definition.
Facts
The facts according to your e-mail are:
- there are two unmarried individuals that have been living together in a conjugal relationship for the last 14 months;
- the first four months, they lived in a condo owned by the female indivdual;
- the last 10 months, they have lived together in a larger rented condo;
- now they want to buy a home; and
- they want to know if the male individual can withdraw from his registered retirement savings plan (RRSP) under the HBP.
You also state that it is clear that the female individual is not eligible to withdraw under the HBP.
Under proposed legislation, subsection 248(1) of the Act provides for the definition of "common-law partner". Under the proposed amendment that is applicable to the Act in general, for 2001 and later taxation years, with respect to a taxpayer at any time, "common-law partner" includes a person who cohabits at that time in a conjugal relationship with the taxpayer and has so cohabited throughout the 12-month period that ends at that time. For the purpose of this definition, where at any time the taxpayer and the person cohabit in a conjugal relationship, they are, at any particular time after that time, deemed to be cohabiting in a conjugal relationship unless they were living separate and apart at the particular time for a period of at least 90 days that includes the particular time because of a breakdown of their conjugal relationship.
Thus, an individual is a common-law partner only after the 12-month period ends. A common-law partnership means the relationship between two persons who are common-law partners of each other.
One of the conditions for an amount to qualify as a "regular eligible amount" for purposes of the HBP is clause (i) of paragraph (f) of that definition in subsection 146.01(1) of the Act. This clause requires that the individual's common-law partner cannot have had an owner-occupied home for the period specified in paragraph (e) of the definition of "regular eligible amount" that was inhabited by the individual during the common-law partner's common-law partnership with the individual.
In the situation described, at the time of the withdrawal, assuming the couple continues to live together in a conjugal relationship, the two individuals are common-law partners and therefore in a common-law partnership. The female common-law partner did have an owner-occupied home in the period specified in paragraph (e) of the definition of "regular eligible amount" and the male common-law partner did inhabit that owner-occupied home. However, the male common-law partner did not inhabit the owner-occupied home during the common-law partnership with his female common-law partner because at the time that they lived in that owner-occupied home they were not common-law partners in a common-law partnership as they had not been cohabiting in a conjugal relationship for a 12-month period.
Therefore, clause (i) of paragraph (f) will not disqualify the withdrawal by the male common-law partner from his RRSP from being a "regular eligible amount" under the HBP.
We trust our comments will be of assistance.
Sharmini Ratnasingham
For Director
Business and Employment Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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