Principal Issues: [TaxInterpretations translation] Does the gift qualify as an acquisition for purposes of the definition "regular eligible amount" in subsection 146.01(1)?
Position: Yes
Reasons: Acquiring a home by way of gift is an acquisition within the meaning of paragraph 146.01(1)(b) of the definition "regular eligible amount". Use of the term acquisition in the ITA.
XXXXXXXXXX 2010-037083 Catherine Ayotte, Notary, M. Fisc.
September 28, 2010
Dear Madam,
Subject: Acquisition of property by gift under the HBP
This is further to your email of June 10, 2010, in which you asked for our comments as to whether there can be the benefit of the home buyers' plan (HBP) where the home is acquired by way of gift.
Please note that, unless otherwise indicated, all statutory references herein are to the provisions of the Income Tax Act (the "Act").
As explained in Information Circular 70-6R5, it is not the practice of the Directorate to comment on proposed transactions involving specific taxpayers otherwise than in the form of an advance income tax ruling. If your situation relates to a completed transaction, you should forward all relevant facts and documentation to the appropriate Tax Services Office for their views. However, we are prepared to provide the following general comments that may be helpful to you.
In order to be eligible for the HBP, various conditions must be satisfied. For more information, see the section "What are the conditions for participating in the HBP?" in the RC4135 Home Buyers' Plan guide, which is available on the Canada Revenue Agency's Web site at http://www.cra-arc.gc.ca/E/pub/tg/rc4135/READ-ME.html.
The definition "regular eligible amount" in subsection 146.01(1) sets out some of those conditions. For example, you must have entered into a written agreement to acquire or construct a home before receiving an amount as a benefit under a registered retirement savings plan. In our view, where a written agreement is for the acquisition of a home by way of gift, there is a valid acquisition for the purposes of that definition. Consequently, provided the other conditions for participating in the HBP are satisfied, acquiring a qualifying home by way of gift will not prevent you from participating in the HBP.
We hope that our comments are of assistance.
Best regards,
Louise J. Roy
Manager
Financial Sector and Exempt Entities Section
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch.