30 March 1993 Internal T.I. 9307997 F - RRSP Home Buyers' Plan

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.

March 30, 1993

Attention:  Dave Kannegiesser

RRSP Home Buyers' Plan

This is in reply to your memorandum received by facsimile on March 19, 1993, regarding the use of the Home Buyers' Plan to pay off balances of amounts owing under agreements to purchase houses.

You submitted two samples of purchase agreements for the purchase of a house which called for a downpayment, a 10 year series of payments of principal and interest, and a final payment, which in one of the contracts was $100. The purchaser took possession of the house at the start of the contract but did not obtain legal title until the final payment was made. Also, there were other restrictions placed on the purchaser during this period regarding the use of the premises. After reviewing the information submitted it is our opinion that these purchasers could not withdraw funds under the RRSP Home Buyers' Plan and pay off the balances owing under these contracts.

The definition of eligible amount in section 146.01 of the proposed legislation requires that the individual acquire the qualifying home after February 25, 1992 and not more than 30 days prior to the date of the withdrawal from the RRSP. The question then is whether the individual acquires the house at the beginning of the contract or at the time all payments are made and title has passed. While the date of acquisition is a question of fact it is our opinion that generally the date of acquisition for these types of contracts occurs when the contract is entered into. This is similar to the position stated in paragraph 2 of Interpretation Bulletin IT-50R that a taxpayer is considered to have acquired a property on the date on which he has all the incidents of title even though legal title remains with the vendor. Although there are some restrictions on the purchaser they are not sufficient enough to conclude that he has not acquired the property.

Even if an individual is not considered to have acquired the home at the beginning of the contract, he has an interest in it as the contracts require the vendor to repurchase the purchaser's interest at specified amounts. Paragraph 146.01(2)(a) states that an individual has acquired a home if he has acquired it jointly with another person. Consequently it is our opinion that an individual who already has an interest in a home is considered to have previously acquired it and generally cannot participate in the RRSP Home Buyers' Plan because of the provisions in the definition of eligible amount requiring him to acquire it after February 25, 1992, or not more than 30 days prior to withdrawing funds from his RRSP.

for DirectorFinancial Industries DivisionRulings Directorate