A Case Related to the RRSP Home Buyers’ Plan
I received a call from a friend’s friend who filed the personal income tax return by herself. She was requested by CRA to pay a significant amount of taxes recently. She said that she shouldn’t pay so much income taxes because she just earned a little income during this tax year. I phoned CRA and found out that CRA treated her as an Emigrant. Therefore, all remaining HBP balance was included as RRSP income in her income tax and benefit return. This friend did become the non-resident of Canada in this year. She didn’t know the rule as the result she has to pay extra taxes than she has expected. The rule is as follows: If the taxpayers become non-residents of Canada , they must choose one of the following options:
- Repay the remaining balance to their RRSP by the earliest of the following dates:
- before the time they file their income tax and benefit return for the year that they become non-residents; or
- 60 days after they become a non-residents.
- Include the remaining balance as RRSP income on line 129 of their income tax and benefit returns for the year that they become non-residents.
If this friend knew the rule, she would have a better plan.