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.
February 12, 1993
Note to File
RRSP:Home Buyer's Plan
Proposed legislation: section 146.01 of the Income Tax Act
Question: Does the Home Buyer's Plan permit an individual to purchase the interest of a former spouse in a home in which he already has an interest?
Analysis:
146.01(1) eligible amount: this is the amount an individual receives
from his RRSP and uses to buy a qualifying home; paragraph
(d) excludes a home which the individual acquired more than 30
days before the time of the withdrawal.
146.01(2)(a) For the purposes of section 146.01 an individual
is considered to have acquired a qualifying home if he
acquired it jointly with one or more other persons.
The combination of these two provisions will prevent an individual from participating in the Home Buyer's Plan to buy an interest in a home from a former spouse, or from anyone, where the individual already has an interest in the home. If an individual already has an interest in the home, paragraph 146.01(2)(a) deems him to have acquired the home. As a result, paragraph (d) of the definition of eligible amount prevents him from participating in the plan because he is considered to have acquired the home more than 30 days prior to the withdrawal. (Assuming he has owned the interest for some time.)
Published positions: Rulings opinion letter, 5-920687, dated April 3, 1992, opined that an individual could participate in the plan to purchase the interest of her former spouse in their home. This position is incorrect because pursuant to the preceding analysis she is considered to have already owned the home.
Question 3 on page 5 of the of the internal Departmental publication, titled "Home Buyer's Plan", states that an individual cannot participate in the plan to purchase one half interest in a house in which he already owns the other half. We agree that this is the correct position.
Discussed with Mike Moir, Client Assistance Directorate. He indicated that he was involved in the drafting of this legislation, and this issue was considered. The legislation was not intended to permit such purchases and they felt that the aforementioned provisions would prevent it. He indicated that Simon Thompson and Keith Horner from Finance were in on the discussions.
Prepared by David Duff.
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