Citation: 2010TCC571
Date: 20101104
Docket: 2010-2022(IT)I
BETWEEN:
KAREN KA YAN HO,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
V.A. Miller J.
[1]
The issue in this
appeal is whether the amount of $13,854 which the Appellant withdrew from her Registered
Retirement Savings Plan (RRSP) in 2008 was an excluded withdrawal under the
Home Buyers Plan or a benefit which was properly included in income by the
Minister of National Revenue (the Minister).
[2]
There was no
disagreement between the parties concerning the facts in this appeal. Those
facts were: On July 24, 2005, the Appellant entered into an Agreement of
Purchase and Sale to acquire a new construction condominium in Toronto, Ontario. At that time, she knew that it would be
at least three years before the condominium would be ready for occupancy.
[3]
The Agreement of
Purchase and Sale required the Appellant to make a series of
payments to the developer. In accordance with the schedule of deposits, the
amount of $10,712 was due on July 24, 2006. The Appellant had only $6,146 in
her RRSP with the Royal Bank of Canada and she withdrew it under the Home Buyers
Plan (HBP) to fund a portion of the deposit which was due.
[4]
The Appellant stated
that she made further contributions to her RRSP from July 2006 onward so that
by the closing date for the purchase of the condominium, there was $13,854 in
her RRSP. She withdrew this amount to complete the purchase on December 16,
2008. The two withdrawals ($6,146 and $13,854) totalled $20,000 which was the
maximum allowed under the HBP.
[5]
In addition to the
facts above, the Minister has also relied on the following assumptions:
(h)
the appellant did not cancel her participation
in the HBP in respect of the First Withdrawal;
(i)
in the 2005, 2006 or 2007 taxation years, or
within 60 days after the end of the respective taxation years, the appellant
did not pay amounts equal to or greater than the amount of the First Withdrawal
to an RRSP under which she is an annuitant in an amount and designate such
amounts in prescribed form as repayments under the HBP; and
(j)
the appellant did not include any part of the
First Withdrawal or the Second Withdrawal in computing income for the 2005,
2006, 2007 and 2008 taxation years.
The Appellant has admitted these
assumptions.
[6]
Paragraph 56(1)(h)
and subsection 146(8) of the Income Tax Act (the “Act”) read:
56. (1) Amounts
to be included in income for year -- Without restricting the generality of
section 3, there shall be included in computing the income of a taxpayer for a
taxation year,
…
(h) registered
retirement savings plan, etc. [RRSP or RRIF] -- amounts required by section
146 in respect of a registered retirement savings plan or a registered
retirement income fund to be included in computing the taxpayer's income for
the year;
146. (1) Definitions
-- In this section,
(8) Benefits
[and withdrawals] taxable -- There shall be included in computing a
taxpayer's income for a taxation year the total of all amounts received by the
taxpayer in the year as benefits out of or under registered retirement savings
plans, other than excluded withdrawals (as defined in subsection 146.01(1) or
146.02(1)) of the taxpayer and amounts that are included under paragraph
(12)(b) in computing the taxpayer's income.
[7]
An excluded withdrawal
and an eligible amount are defined in subsection 146.01(1) of the Act as
follows:
146.01 (1)
Definitions -- In this section,
"eligible
amount" of an individual is a regular eligible amount or supplemental
eligible amount of the individual;
"excluded
withdrawal" of an individual means
(a) an eligible
amount received by the individual,
"regular
eligible amount" of an individual means an amount received at a
particular time by the individual as a benefit out of or under a registered
retirement savings plan if
…
(i) the
individual's HBP balance at the beginning of the calendar year that includes
the particular time is nil.
[8]
In accordance with the definition
of benefit in 146(8), all withdrawals from an RRSP, except excluded
withdrawals, are to be included in the calculation of a taxpayer’s income. An
excluded withdrawal is an eligible amount if it meets certain criteria, one of
which is that the taxpayer’s HBP balance is nil at the beginning of the
calendar year in which the withdrawal is made.
[9]
The Appellant made an excluded
withdrawal of $6,146 in 2006. After this withdrawal, she did not designate, in
prescribed form, any amounts which she contributed to a RRSP as a repayment
under the HBP. Consequently, the amount of $13,845 which the Appellant withdrew
from her RRSP in 2008 was not an excluded withdrawal and was correctly included
in her income as a benefit.
[10]
Agent for the Appellant has
submitted that the reality of today’s world is that new construction will
always require a series of deposits over a period of time. The provisions of
the legislation with respect to the HBP, as it now exists, is contrary to the
underlying spirit of this program which is to financially assist first time
home buyers with home ownership. It is illogical that all withdrawals must be
made during the same year. In conclusion, he asked that the appeal be allowed
and that “the legislation be amended to reflect the most common circumstances
encountered when purchasing a home”.
[11]
The Appellant has been assessed
correctly and in accordance with the Act. This Court does not have the
jurisdiction to amend the legislation; that remedy lies with Parliament.
[12]
The appeal is dismissed.
Signed at Ottawa, Canada, this 4th day of November 2010.
“V.A. Miller”
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