16 August 1993 Internal T.I. 9322137 F - Home Buyers' Plan Repayment

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.

August 16, 1993

Attn:  D.A. Kannegiesser 

Home Buyers' Plan

This is in reply to your facsimile transmission of July 26, 1993, in which you ask for our opinion concerning the following situation.

An individual makes an eligible withdrawal from an RRSP to participate in the Home Buyers' Plan. A house is purchased and then the individual goes bankrupt; consequently, the RRSP becomes vested in the trustee.

You ask what happens to the amounts to be repaid and if the trustee has a claim to the repayments.

OPINION

A withdrawal under the Home Buyers' Plan is not a borrowing since there is no entity to which the client owes money. A client may withdraw funds from any RRSP on a tax-free basis. The client then has an option to either repay the minimum amount in each of the fifteen years to any RRSP('s) or be subject to an income inclusion of the minimum amount in each of the fifteen years. The tax liability arising from the income inclusion would be unaffected by a person's bankruptcy except to the extent that an income tax liability arising from any income inclusion is affected by bankruptcy. The trustee has no claim to any of the repayments since there is no debt owing to the specific RRSP.

We trust these comments are of assistance.

for DirectorFinancial Industries DivisionRulings Directorate

c.c.:      Ms Jennifer Loome      CAD Service Monitoring