How do I handle the tax receipts I received after withdrawing from my RRSP under the Home Buyer's Plan?

Jamie Golombek, vice-president of taxation and estate planning at AIM Trimark Investments, has the answer.

Jamie Golombek 25 February, 2003 | 2:00PM
Dear Expert:

I opened an RRSP account in January 2002 and invested in a mutual fund but I sold off the fund in December, closed the account and transferred the proceeds to my RRSP daily-interest savings account. In January, I withdrew the entire amount under the Home Buyer's Plan. Now I have received an RRSP tax receipt for the "remainder of 2002 contributions"; do I have to claim this receipt on my 2002 income tax return to reduce my income? How do I report the amount that I transferred from my RRSP? I am very confused about how to handle this on my 2002 tax return.

Expert Opinion:

Unless you made other RRSP contributions in 2002, it is unclear why you would have received an RRSP tax receipt for the "Remainder of 2002 Contributions" in respect of this "transfer". When you originally "opened an RRSP account" in January 2002, I assume by "opened" you mean that you made an RRSP contribution. At that point you should have received an RRSP contribution receipt for the "first 60 days" of 2002, which you would have included with your 2001 tax return.

When you "closed the account", presumably you had the financial institution transfer the money from the mutual fund RRSP account to your daily interest savings RRSP account. The transfer should not have generated an RRSP tax receipt if it was done properly. In other words, as long as you did not withdraw the funds out of the mutual fund account first and then make a subsequent RRSP contribution in December, this would have been a direct transfer, which would not have generated a receipt. However, if you actually withdrew the money out in December and took the money (less any withholding tax) and then deposited it, on your own, to the RRSP savings account, what you have done is made an RRSP withdrawal, which is fully taxable on your 2002 return, followed by a subsequent RRSP contribution in December.

If this is the case, since you withdrew the entire amount from the RRSP under the Home Buyer's Plan in January 2003, which was less than 90 days after the December RRSP contribution was made, you cannot claim this RRSP contribution in any year.

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Jamie Golombek

Jamie Golombek