question on HBP repayment

[cn008]

Hi, I just found that spouse RRSP cannot be used to repay the HBP loan. But I have purchased the entire amount as spouse RRSP because my bank adviser did not tell me this, back in April 2007.

So I have contributed more than 2000 over the allowed contribution limit. >:( Is there any remedy? Can I transfer the spouse RRSP to me and then claim it as repayment of HBP?

Thanks for any advice.

[pitz]

You could run down to the bank, and make an additional contribution for the amount of the required HBP repayment, doing it properly this time, to your own (non-spousal) account.

Sounds like you might end up getting hit with 8 months of penalties for the overcontribution. I guess, just report it to the CRA as you would normally on your tax return, and then file T1-OVP if they send you a letter request you to.

The damage is done; doing a overcontribution withdrawal won't undo the past, and January 1, 2008 opens up an entire new year of RRSP contribution room.

[pitz]

BTW, had you caught the error earlier (like within a month or two of contributing to the RRSP), you probably could have convinced the bank to reverse the contribution.

But its probably too late for that now.

[cn008]

Thanks for the reply.

I did not catch the error until now. So I guess I would have to pay the penality. But the bank adviser should have told me about this. Because when I made the contribution in Apr, I clearly told him that $xxxx amount is for regular RRSP, and $xxx amount is for HBP repayment, he did not say anything to me on this restriction and he just told me it is not necessary to tell him the details.

Also, I withdrew the amount from HBP in 2006, and the assessment for 2006 says "your 2007 required repayment" is 0 (zero), can I still repay a portion of the HBP loan? Or I cannot and I have to wait till 2008?

Thanks.

[Thalo]

You can pay back as much extra as you want and it reduces the amount you have to contribute in the future.

Check with the CRA, there must be some way to "re-declare" an already contributed amount as personal instead of spousal. I mean, all that matters is who uses it in the end, your contribution room and your tax deductions remain unchanged.

[alanbrenton]

Hi, I just found that spouse RRSP cannot be used to repay the HBP loan. But I have purchased the entire amount as spouse RRSP because my bank adviser did not tell me this, back in April 2007.

So I have contributed more than 2000 over the allowed contribution limit. >:( Is there any remedy? Can I transfer the spouse RRSP to me and then claim it as repayment of HBP?

Thanks for any advice.

Is it possible to make HBP repayments by just having two spousal RRSP accounts?

I'd rather have fewer RRSP accounts and was wondering if I can effect HBP payments while just having two spousal RRSP's setup? We still do have our individual GRRSP's though our employers.

I just set up two self-directed spousal RRSP accounts at TDW yesterday and will be funding them today or tomorrow (I brough the cheques to TDW yesterday only to be told that I will need to make the deposit at a TD Canada Trust branch).

To get around this HPB repayment problem, should we each make non-spousal contributions, i.e. with the annuitant contributing?

Thanks.

Link to TDW website discussing contributions to a spousal plan.
https://www.tdwaterhouse.ca/services/assd.jsp

This is what I got from the CRA's HBP document:

Contributions you cannot designate – Not all
contributions you make to your RRSPs in the repayment
year or in the first 60 days of the following year can be
designated as a repayment under the HBP. You cannot
designate contributions that:
■ you make to your spouse’s or common-law partner’s
RRSPs (or that he or she makes to your RRSPs);
■ are amounts you transfer directly to your RRSPs from a
registered pension plan, deferred profit sharing plan,
registered retirement income fund, the Saskatchewan
Pension Plan, or another RRSP;
■ are amounts you deducted as a re-contribution of an
excess qualifying withdrawal that you designated to
have a past service pension adjustment approved;
■ are amounts that you designate as a repayment under the
Lifelong Learning Plan (LLP) for the year;
■ are amounts you contribute in the first 60 days of the
repayment year, that you:
– deducted on your return for the previous year, or
– designated as a repayment for the previous year under
the HBP or the LLP; or
■ are amounts you receive in the year (such as retiring
allowances) that you transfer to your RRSPs and deduct
or will deduct on your return for that year.

[testinz]

Contact CRA, they have a form you can use to reverse the payment over 2000. It is very easy to do. Happened to us last year also :)

We didn't have to pay any fee/taxes/interest on the over payment.


Hi, I just found that spouse RRSP cannot be used to repay the HBP loan. But I have purchased the entire amount as spouse RRSP because my bank adviser did not tell me this, back in April 2007.

So I have contributed more than 2000 over the allowed contribution limit. >:( Is there any remedy? Can I transfer the spouse RRSP to me and then claim it as repayment of HBP?

Thanks for any advice.