20 February 1997 External T.I. 9703715 - HOME BUYERS WITHDRAWAL

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.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues:

Whether husband can withdraw eligible amount in one calendar year and wife withdraw eligible amount in subsequent calendar year with respect to joint purchase of a home under the Home Buyers' legislation.

Position:

Yes.

Reasons:

Provided all conditions met by both with respect to their particular "eligible amount" nothing in legislation requires that persons taking joint title withdraw amounts in same calendar year.

XXXXXXXXXX                                		970371

February 20, 1997

Dear XXXXXXXXXX:

Re: Home Buyers' Plan Provisions

This is in reply to your facsimile transmission of February 11, 1997, in which you ask whether your wife is eligible to withdraw an amount from her registered retirement savings plan ("RRSP") under the above-noted legislation. In particular you ask whether your wife can withdraw amounts from her RRSP which is a "spousal plan" as defined in subsection 146(1) of the Income Tax Act (the "Act") so long as the withdrawal takes place no later than 30 days after you both acquire title to a home. You indicate that your wife intends to contribute an amount to her RRSP more than 90 days before any withdrawal under the Home Buyers' Plan ("HBP") provisions and that you have already withdrawn an amount in 1996 from your own RRSP with respect to the purchase of the home which is to be completed in June 1997.

Your question relates to a proposed transaction and we are unable to provide an opinion which is binding on the Department except in the context of an advance income tax ruling. We may offer, however, the following general comments.

An amount may be withdrawn from an individual's RRSP without tax consequences in the year of withdrawal if the withdrawal is made in accordance with section 146.01 of the Act respecting the HBP. It is irrelevant whether the RRSP is a "spousal plan" or not since there will be no income inclusion to the annuitant or the contributor spouse if the withdrawal complies with section 146.01 of the Act.

In order for the amount to be an "eligible amount" under the HBP several conditions must be satisfied. Assuming all these conditions are satisfied, it is our view that where two or more individuals will acquire title of a home (hereinafter referred to as the "Purchaser" or "Purchasers" as the context requires) it is not necessary that the amounts being withdrawn from the separate Purchasers' RRSPs are withdrawn in the same calendar year. So long as prior to any withdrawal the Purchasers are parties to the agreement to purchase the home, that each Purchaser's amount is withdrawn no later than 30 days after title is acquired and that title is acquired by the "completion date" (i.e. October 1 of the year following the year in which the amount was withdrawn), one or more Purchasers may withdraw an amount in one calendar year and the other(s) in a subsequent year without affecting their eligibility under the HBP.

With respect to a contribution to an RRSP before a withdrawal under the HBP, we confirm that if the premium is paid to the RRSP at least 90 days prior to a withdrawal under the HBP, a deduction of that amount will not be prohibited by reason of the contributor's participation in the HBP.

We trust our comments will be of assistance to you.

Yours truly,

for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch