XXXXXXXXXX
RE: Registered Retirement Savings Plan ("RRSP") Home Buyers' Plan
Dear XXXXXXXXXX
This is in response to your letter of December 29, 1992, regarding the RRSP Home Buyers' Plan ("plan").
The plan, as originally proposed in the February 25, 1992 budget permitted RRSP withdrawals after February 25, 1992 and before March 2, 1993, for the acquisition of a house after February 25, 1992 and before October 1, 1993. The plan was extended pursuant to an announcement on December 2, 1992 to permit withdrawals prior to March 2, 1994 for acquisitions prior to October 1, 1994. However, withdrawals before March 2, 1993 still must be used to acquire a home before October 1, 1993, and one cannot participate in both phases of the plan.
The plan permits participants to build new houses as well as purchase existing houses. For those who are building their houses, the funds can be used to purchase the land and pay for the construction of the house. For those who make their withdrawals after March 1, 1993, they must acquire their house by September 30, 1994. When participants build their houses, it is the Department's position that the house is acquired when it is habitable.
There are relieving provisions for those who withdraw amounts after March 1, 1993 and do not acquire their houses by September 30, 1994. If the participant has paid an amount equal to the total of amounts withdrawn from the RRSP under the plan to arm's length persons for the construction of the house and such payments are made after the withdrawal and before September 30, 1994, then the participant is deemed to have acquired the house by September 30, 1994.
Also, if, by September 30, 1994, the individual has entered into a written contract to acquire a qualifying home, actually acquires the house by September 30, 1995, and is resident in Canada from September 30, 1994 to the time of acquisition, he is deemed to have acquired the house by September 30, 1994.
Finally, if the house is not acquired by September 30, 1994, and the participant does not expect to meet the requirements in the preceding paragraph, he can repay the withdrawal by December 31, 1994 and there will no income inclusion.
We trust this is satisfactory.
Yours truly,
for Director, Financial Industries Division Rulings Directorate