In a recent blog, I wrote about the availability of Home Buyer’s Plan (HBP) to an individual after the death of her spouse who purchased the matrimonial home.
In a recent Technical Interpretation (2019-0819671E5, D. Odubella), the Canada Revenue Agency (CRA) was asked by a taxpayer to review the availability of the HBP to purchase a home that is located in a district where their disabled daughter could attend a school providing a specialized program suitable for her educational needs. In this fact circumstance, the taxpayer’s spouse owned a home outside the school district. Given the the limited school resources for the daughter’s needs in the areas where the existing home was located, the family moved to temporary rental accommodation within the school district to allow the daughter to attend the school while looking for a permanent home.
As a reminder, The Home Buyers’ Plan (HBP) is a program that allows an individual to withdraw funds from their Registered Retirement Savings Plans (RRSPs) to buy or build a home for themselves. The HBP allows the individual to pay back the withdrawn funds within a 15-year period. To be eligible for the plan, the individual must be considered a first-time home buyer, as defined in the relevant sections of the Income Tax Act (ITA). However, as the CRA noted in the technical interpretation, this requirement does not apply where the home is acquired as a residence for “specified disabled person” as defined in the relevant sections of the Income Tax Act (TA), – generally, any related person who is eligible for the disability tax credit.
The CRA noted that this requires that the purpose of acquiring the residence would be to allow the disabled person to live in either:
• a dwelling which is more accessible, or in which the disabled person is more mobile or functional; or
• an environment which is better suited to the personal needs or care of the disabled person.
CRA indicated that it appeared that the purpose of the RRSP withdrawal would be to enable the daughter to live in an environment better suited to her personal needs and care, such that the second test
noted above would be met.
Happy Reading and stay safe