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: Whether a withdrawal from an RRSP can be made under the HBP to contribute to the purchase of a more accessible home for a disabled grandchild, when neither the taxpayer nor the disabled grandchild are purchasing the home.
Position: No.
Reasons: Either the individual (ie. the annuitant) or the specified disabled person must enter into an agreement to acquire the qualifying home, and must subsequently acquire the qualifying home.
XXXXXXXXXX
2013-049648
E. Wirag
(613) 957-2090
October 15, 2013
Dear XXXXXXXXXX,
Re: RRSP Withdrawals Under HBP for the Purchase of a Home for a Disabled Grandson
We are replying to your email of July 8, 2013 in which you asked for our comments regarding the eligibility of withdrawals from a Registered Retirement Savings Plan ("RRSP") under the Home Buyers Plan ("HBP"). More specifically, you asked for our comments regarding whether those withdrawals would be eligible if they were contributed to your daughter who was to be the purchaser of a more suitable home for your disabled grandson.
Written confirmations of the tax implications inherent in particular transactions are provided by this Directorate where the transactions are proposed and are the subject matter of an advance income tax ruling submitted in the manner set out in Information Circular 70-6R5, "Advance Income Tax Rulings", dated May 17, 2002. This Information Circular and other CRA publications can be accessed on the internet at http://www.cra-arc.gc.ca/formspubs/menu-e.html. Where a particular transaction has already been completed, a review of the relevant facts and circumstances surrounding the situation would be required. Such review would normally be conducted by the applicable Tax Services Office during the course of an income tax audit which, if undertaken, would be carried out after the particular taxpayer has prepared and filed an income tax return for the year. Notwithstanding the foregoing, we are prepared to provide the following comments that may be of assistance.
The Canada Revenue Agency's (CRA) general views regarding the HBP are contained in the Guide RC4135, Home Buyers Plan at
http://www.cra-arc.gc.ca/E/pub/tg/rc4135/README.html.
In order to participate in the HBP, an individual is required to satisfy several conditions set out under section 146.01 of the Income Tax Act (the "Act"). One of the conditions is that an amount withdrawn from an individual's RRSP at any particular time must be an "eligible amount". An eligible amount is either a "regular eligible amount" or a "supplemental eligible amount" of the individual, depending on the situation.
As your letter refers to a withdrawal being made for the purposes of purchase of a home for your disabled grandson, you would need to satisfy the conditions set out under the "supplemental eligible amount". One of the conditions set out under the definition of "supplemental eligible amount" found under subsection 146.01(1) of the Act is that either the individual (i.e., the annuitant) or the specified disabled person must enter into an agreement to acquire the qualifying home.
In your letter you stated that the child is a minor and neither you nor the disabled individual will enter into the agreement to purchase the home. Based on the information provided, it appears that you would not meet this condition.
We hope this information is of assistance to you.
Yours truly,
Sharmini Ratnasingham
For Director
Business and Employment Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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