The taxpayers bought a pre-built home in December 2020, withdrew from their RRSPs in 2021 in connection with the purchase, but made further withdrawals in 2022 in reliance on the home buyers’ plan (HBP) rules. CRA assessed the 2022 withdrawals as not being covered by the HBP and, in particular, refused to apply the s. 146.01(2)(d) rule, which would have deemed the 2022 withdrawals to have been made at the end of 2021 (and, to therefore, qualify as eligible amounts) if those withdrawals were made in January 2022 “or at such later time in the year as [was] acceptable to the Minister.” CRA considered s. 146.01(2)(d) did not apply on the basis that there were insufficient funds in their RRSPs on December 31, 2021 to fund the withdrawals.
In rejecting the Minister's position, Sorensen J. stated (at para. 17) that a deeming rule, such as s. 146.01(2)(d), "creates a legal fiction and imposes an alternate reality," and that the s. 146.01(2)(d) rule accordingly was “unconstrained by reality, including whether there was a positive account balance at prior year-end” (para. 18).
That left the question as to whether their withdrawals in 2022 (which occurred after January 2022) were "acceptable to the Minister." In imputing such acceptability, Sorensen J indicated that he could infer from the information that was properly before him that the 2022 date of the second withdrawals was not a problem for the Minister, stating in this regard (at para. 29) that “[i]f it was, that would have been mentioned somewhere in the numerous places where the bases for the assessments were described and established on the record”. Furthermore, the respondent did not assert that the taxpayers had sought discretionary relief to accept the 2022 date of their withdrawals under the HBP until making a written submission after the hearing, and it was unfair to the taxpayers at that juncture to have raised “any purported exercise of Ministerial discretion” (para. 37).