2015-0574271E5 Meaning of a qualifying home

Principal Issues: Whether a qualifying home for the purposes of the Home Buyer’s Plan, can be located outside Canada.

Position: No.

Reasons: The wording of paragraph (a) of the definition of “qualifying home” in section 146.01.

Author: El-Kadi, Randa
Section: 146.01

XXXXXXXXXX
                                                     2015-057427
                                                     Randa El-Kadi    

June 22, 2015

Dear XXXXXXXXXX:

Re:   The definition of a “qualifying home”

This is in response to your email of March 3, 2015, regarding the Canada Revenue Agency’s (“CRA”) interpretation of the phrase “qualifying home” for purposes of the Home Buyers’ Plan (“HBP”).

You have indicated that your spouse spends XXXXXXXXXX months every year outside Canada for medical reasons and that you would like to avail yourself of the HBP to build a home for your spouse outside Canada. However, you are concerned that such a home would not qualify for the purpose of the HBP because Guide RC4135, Home Buyers’ Plan (no longer in print), defines a “qualifying home” as “a housing unit located in Canada.”

In addition, based on your telephone conversation (XXXXXXXXXX/El-Kadi) on March 5, 2015, you would like to obtain tax policy information regarding the HBP, particularly with respect to the requirement that a “qualifying home” be located in Canada.

Our Comments

This technical interpretation provides general comments about the provisions of the Income Tax Act (“Act”) and related legislation (where referenced).  It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination. The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R6, Advance Income Tax Rulings and Technical Interpretations.

The HBP allows an individual to withdraw funds from the individual’s registered retirement savings plans to buy or build a home provided that the conditions set out under section 146.01 of the Act are met. One of the conditions is that the individual must enter into an agreement in writing for the acquisition or the construction of a “qualifying home.” There are exceptions to some of the conditions in the HBP where the home is being acquired for an individual who is a specified disabled person as defined in section 146.01, however, in all cases, the home must be a “qualifying home.” 

A “qualifying home” is defined in subsection 146.01(1) of the Act as:

“(a) a housing unit located in Canada, or

(b) a share of the capital stock of a cooperative housing corporation, the holder of which is entitled to possession of a housing unit located in Canada,

except that, where the context so requires, a reference to a qualifying home that is a share described in paragraph (b) means the housing unit to which the share described in that paragraph relates;”

The legislation is clear that a housing unit must be located in Canada to be a qualifying home for the purpose of the HBP. As discussed in the telephone conversation, the CRA is responsible for administering the tax system and applying the current tax legislation as enacted by Parliament, while the Department of Finance Canada is responsible for tax policy and changes to the Act.

The concern you raise regarding the definition of a qualifying home for purposes of the HBP is a tax policy matter that is the responsibility of the Department of Finance Canada. Therefore, you may want to bring your concern to the attention of that Department at the following address:

      The Honourable Joe Oliver
      Department of Finance Canada
      90 Elgin Street
      Ottawa ON K1A 0G5

You may also find the following website for the Department of Finance Canada helpful with respect to obtaining tax policy information on the HBP at www.fin.gc.ca/fin-eng.asp.

We trust that these comments will be of assistance.

Yours truly,

Pamela Burnley, CPA, CA
Manager - Tax Credits and Ministerial Issues
Business and Employment Division
Income Tax Rulings Directorate

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