1) Can we move money from DPSP to Spousal RRSP?
2) Assuming we can, If spouse has the contribution room, and the contributing spouse contributes lets x$ to the spousal RRSP account, and they withdraw that amount for home deposit after 89 day period,
a) Can the contributing spouse use this contribution for tax deduction the same year, Or he has to wait for 3 years?
b) What is the 3 year rule . Can someone state it clearly?
Thank you in advance.
bison
Location: carl sagan's universe
Posted on: 04-01-07 00:23:11
Quote:
Originally posted by bison
1) Can we move money from DPSP to Spousal RRSP?
2) Assuming we can, If spouse has the contribution room, and the contributing spouse contributes lets x$ to the spousal RRSP account, and they withdraw that amount for home deposit after 89 day period,
a) Can the contributing spouse use this contribution for tax deduction the same year, Or he has to wait for 3 years?
b) What is the 3 year rule . Can someone state it clearly?
Thank you in advance.
1. That I know of, you cannot move money from your DPSP into your spousal RRSP.
2. For a spousal RRSP, the room taken into account is that of the payor not the payee, that is, if the wife is contibuting into the husband's RRSP, it depends on the contribution room of the wife, not the husband's.
3. You do not have to wait 3 years for the tax deduction.
4. The 3 year rule in simple terms is: If the wife makes a deposit into the husband's RRSP, she can claim the tax benefit . If however, within 3 years the husband decides to withdraw from that RRSP, that withdrawal amount will be added to the wife's income and she has to pay tax on it the year it is withdrawn. If the withdrawal takes place after 3 years, it will be added to the husband's income and he has to pay tax accordingly.
Please note I am using husband and wife here as an example. It good be a couple living together as well.
For more clarification, please do not hesitate to fire away.
Thanks for all the explanations....
Just to re-confirm:
If i contribute to a spousal RRSP and we use that money for our home deposit under HBP, then we we dont need to wait for 3 years to withdraw that money. We can withdraw the money after 89 days right away without paying any penalty? And I can claim the tax deduction this year itself, right?
bison
Quote:
Originally posted by bison
Thanks for all the explanations....
Just to re-confirm:
If i contribute to a spousal RRSP and we use that money for our home deposit under HBP, then we we dont need to wait for 3 years to withdraw that money. We can withdraw the money after 89 days right away without paying any penalty? And I can claim the tax deduction this year itself, right?
Yes!
For all questions on HBP please follow this http://www.cra-arc.gc.ca/tax/individuals/topics/rrsp/hbp/menu-e.html
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Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada
