REASONS FOR JUDGMENT
Sorensen J.
I. Introduction
[1] These are Home Buyers Plan or “HBP”
cases. Under the HBP program, individuals can draw funds from their Registered Retirement Savings Plans (“RRSP”
) to fund the purchase or building of a home without paying tax on the withdrawal. The individual is required to recontribute to their RRSP over time, otherwise they have to pay tax. The HBP program is a housing and economic policy tool that facilitates social justice.
[2] Abhishek Soni and Reena Uppal (the “appellants”
) are married and they both work in the service industry. They dreamt the Canadian dream of homeownership. They took the outstretched helping hand of the HBP, purchasing a pre-construction home by agreement of purchase and sale dated December 21, 2020. They each intended that the amounts withdrawn from their RRSPs be sheltered from tax by the HBP.
[3] The appellants were deprived of HBP treatment for amounts drawn from RRSPs in 2022. Their appeals were heard together, and these reasons apply to both of them.
[4] In brief, the Minister of National Revenue (the “Minister”
) failed to correctly apply a special interpretive provision, and that negates the basis for the disputed assessments. Consequently, the appeals are allowed.
II. Facts
[5] As noted, the appellants bought a pre-build home on December 21, 2020, and withdrew from their RRSPs to fund the purchase. Unavoidable delays by the builder resulted in them moving into their home in 2023. They still live there today, although like many Canadians they are burdened by the cost of housing, including high interest rates.
[6] The appellants first withdrew funds from their RRSPs under the HBP in 2021. Then, in 2022, Abhishek withdrew $17,686 from his RRSP and Reena withdrew $20,793 from hers. The Minister assessed both withdrawals as income, not covered by the HBP. This was because the withdrawals were made in 2022, outside the statutory calendar-year window, and the Minister did not apply a deeming rule to allocate the 2022 withdrawals back to 2021, ostensibly because there were insufficient funds in their RRSPs on December 31, 2021.
[7] There is no other evidence about the basis for the disputed assessments.
[8] The appellants pled that the CRA denied HBP treatment for the 2022 withdrawals, because the CRA said the period for withdrawal is limited to 12 months from the first withdrawal. The respondent pled no knowledge of that statement and placed it in issue.
[9] The appellants also pled that they unsuccessfully asked the CRA to accept the 2022 withdrawals under the HBP. The respondent pled no knowledge of that statement and placed it in issue too. Based on the evidence in review, it cannot be confirmed what the appellants meant when they said that they asked the CRA to accept the 2022 withdrawals under the HBP. They might have been referring to notices of objection.
III. Issue
[10] The question in this case is whether the 2022 withdrawals can be deemed received in 2021 by the special interpretive rule in s. 146.01(2)(d). The answer is yes.
[11] The bases for the assessments were set out in paragraph 9 of the reply for Reena and paragraph 11 of the reply for Abhishek. The respondent argued that the Minister properly assessed them for the 2022 taxation year because:
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a)They made their 2022 withdrawals after January 31 of the year after their first withdrawals (being 2021);
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b)They did not have the funds in their RRSPs as of December 31 of the year of the first withdrawals (2021) to cover the second withdrawals (2022), pursuant to s. 146.01(2)(d); and
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c)The second withdrawals were therefore RRSP income in 2022, pursuant to s. 56(1)(h).
[12] This position was echoed in factual assumptions set out in the replies: they made RRSP withdrawals in 2022; were allowed to make more than one eligible withdrawal under the HBP within the same permissible period; but the value of their RRSPs as of December 31, 2021, was $0; therefore, the 2022 withdrawals were ineligible under the HBP. The factual portions of the Ministerial assumptions were unchallenged. The respondent’s position echoes the confirmation notice for Abhishek, which was in evidence and which said:
“For your 2022 withdrawal to be considered an eligible HBP withdrawal as the 2021 withdrawal [sic], the amount of $17,686.00 withdrawn in 2022 must have been in the account on December 31, 2021, in accordance with paragraph 146.01(2)(d) of the Income Tax Act. Therefore, the assessment is correct.”
[13] For greater certainty, as discussed further below, the disputes were not framed in terms of any exercise of Ministerial discretion: the assessments were open to challenge under s. 165(1) by notices of objection without limitation, and to challenge under s. 169(1) by way of an appeal to this Court. The focal point of these appeals was s. 146.01(2)(d), and I have not conducted a 360-degree review of the HBP legislation towards developing any alternate theories of these cases. Rather, the cases were decided based on their facts and the operation of s. 146.01(2)(d).
IV. Analysis
[14] Subsection 146.01(2) sets out special interpretive rules. The relevant portion of s. 146.01(2)(d) reads as follows:
For the purposes of this section… (d) an amount received by an individual in a particular calendar year is deemed to have been received by the individual at the end of the preceding calendar year and not at any other time if
(i) the amount is received in January of the particular year (or at such later time as is acceptable to the Minister)…
[15] Paragraph (d) is a deeming rule to help taxpayers who make withdrawals over the span of more than one calendar year, and it is the nucleus of these cases. The provision operates to deem an amount received in a particular year to have been received by the end of the preceding calendar year, to cure a straddling problem and ensure that the later withdrawal qualifies. The amount must be received in January of the particular calendar year to be deemed received at the end of the prior year, or it may be received at some later date that is acceptable to the Minister.
[16] The logic underlying the assessing position is limited. The Minister’s impulse was that you cannot make a withdrawal from nil or insufficient funds for purposes of s. 146.01(2)(d). However, there is no statutory criterion in s. 146.01(2)(d) concerning an individual’s prior year-end RRSP balance. Ultimately, the special interpretive provision in s. 146.01(2)(d) ousts the hunch that you cannot “overdraw”
, because the provision is a deeming rule.
[17] A deeming rule creates a legal fiction and imposes an alternate reality for certain purposes. For example, a notice could be deemed received on the date it is sent, even though that is not true. The legal fiction imposed by a deeming rule is neither rebuttable nor a presumption. It is treated as a concrete actuality.
[18] Paragraph 146.01(2)(d) is unconstrained by reality, including whether there was a positive account balance at prior year-end. So the argument that there could not be a deemed withdrawal for the appellants at the end of 2021 fails. The “late”
2022 withdrawals certainly could be backed into 2021 and thus covered by the HBP.
[19] The analysis cannot stop there though, because of the parenthetical clause: “or at such later time as is acceptable to the Minister.”
[20] The clause “or at such later time as is acceptable to the Minister”
is a temporal consideration. The provision does not say “or at such later time and on such bases as are acceptable to the Minister”
, nor “or at such later time and in accordance with prescribed criteria”
, or anything of the sort. What is it that must be acceptable to the Minister? The later time. Which criteria are typically considered? More to the point, which criteria were considered in the cases of Abhishek and Reena? Details are limited. All we have are assessments, a notice of confirmation, and the replies, all of which frame the assessment dispute as concerning the 2021 year-end RRSP balances. However, the facts presented in those documents create a basis for inferences.
[21] The respondent’s written submissions argued that a sufficient year-end RRSP balance is a factor that the Minister considers in connection with applying s. 146.01(2)(d), according to administrative guidance. That administrative guidance was from a conference roundtable in 2018. Among other things, it says that the Minister considers all of the facts and circumstances concerning a late withdrawal in determining whether to apply s. 146.01(2)(d).
[22] The respondent’s submission concerning the parenthetical clause has no traction, for factual and interpretive reasons.
[23] First, factually, while there may be (or may have been) a Ministerial policy concerning s. 146.01(2)(d), there is no evidence that the policy was considered and applied in these cases – no affidavit, and no CRA witness. Further, the cited policy was from 2018. Perhaps it was entirely revoked or changed in ways great or small by the time 2022 rolled around. We have no clues on the record. In any case, what we know is that the basis for the assessments was a perception of insufficient RRSP balances at year-end. That argument seems more or less intuitive on its face: how can you withdraw funds from nothing? And the persuasiveness of that initial notion might hold up, but for the effect of the deeming rule, as discussed.
[24] Second, interpretively, administrative guidance is not law and while it might carry some weight some of the time, it does not assist the respondent in these cases because it does nothing more than propose some self-imposed criterion without interpreting the language of the provision whatsoever. So even if the administrative guidance had not been revoked or changed since 2018, it sheds no light on the operation of s. 146.01(2)(d) or the basis of the assessments. More to the point, the alleged criterion in that guidance, that there must be sufficient RRSP funds on account at year-end finds no purchase in the wording of s. 146.01(2)(d), which considers acceptable timing, not financial criteria.
[25] The Loh case provides some helpful guidance. In Loh, the taxpayer made two RRSP withdrawals under the HBP regime, in two different years. The Court pointed out that the HBP provisions are integrated into the RRSP regime and, consistent with the legislative scheme for reporting and paying tax, these regimes follow a calendar year. However, life does not always fit tidily into a calendar year. The system recognizes that buying and selling houses can sometimes be chaotic, especially new builds. Deals fall through, deals close late and so on.
[26] The Court summarized Mr. Loh’s concern: he made two withdrawals across two years, and the second withdrawal was taxed because it was not an excluded withdrawal. In fact, Mr. Loh used the money to buy a house but was taxed just because the first deal fell through. He thought that was unfair.
[27] The Court correctly stated that it does not have discretion and must apply the law as we find it in the Act. That said, it is a trite proposition that the Minister must apply the Act too, including the special interpretive rule in s. 146.01(2)(d). That provision does not expressly set out relief that a taxpayer must apply for, but rather a rule for the Minister to follow.
[28] In Loh, there was not enough information on the record to determine whether the HBP provisions, including s. 146.01(2)(d) were correctly applied, and the respondent did not lead evidence on that point. More specifically, the Court did not know if the “late”
withdrawal date was unacceptable to the Minister. As a result, the basis for the assessment collapsed and the Court allowed Mr. Loh’s appeal.
[29] The respondent argued in writing that Abhishek and Reena’s cases are distinguishable from Loh, since in that case there was no information on the record regarding the application of s. 146.01(2)(d), including whether the “late”
withdrawal was unacceptable to the Minister. However, as noted above, the statement in the notices of appeal that the appellants sought some solution from the CRA does not establish that they sought discretionary relief per se, or that the disputed assessments were predicated on some “late”
withdrawal date that the Minister did not accept. In the appellants’ cases, and as already noted, the Minister’s legal argument is concerned with the RRSP account balances on December 31, 2021. That is clear from the notice of confirmation, and pleadings, including the Ministerial factual assumptions and the reasons in the replies. An adverse Ministerial conclusion regarding lateness cannot be conjured up from the simple fact that assessments were issued, but I can infer from the information that is properly before me that the 2022 date of the second withdrawal was not a problem for the Minister. If it was, that would have been mentioned somewhere in the numerous places where the bases for the assessments were described and established on the record with evidence.
[30] Loh is perhaps distinguishable in the appellants’ cases only in ways that are worse for the respondent: in the appellants’ cases, I am prepared to make a factual inference, unlike Loh, that the Minister considered s. 146.01(2)(d) and did not find the timing of the second withdrawal unacceptable. The field is open for that inference, for the reasons articulated in the paragraph immediately above. Arising from this inference is the conclusion that s. 146.01(2)(d) is fully operational: the deeming rule must apply to oust the idea that a supposedly insufficient balance prevents a late withdrawal from qualifying under the HBP.
V. Respondent’s Written Submissions
[31] I allowed the respondent to make written submissions to address interpretive questions I asked at the hearing. Counsel of course confirmed that no new evidence would be filed, and that the written submissions would be restricted to points of law.
[32] That said, in written submissions filed 16 days after the hearing, the respondent asserted that it mistakenly pled “no knowledge”
of the facts referenced at paragraphs 8 and 9 above, that it wished to admit them and that, if admitted, they would be part of the Minister’s assumptions. The initial reply for Abhishek was not prepared by counsel but by a CRA officer, and the reply for Reena was based on that.
[33] The request to amend the replies after the hearing to admit facts and insert them as Ministerial assumptions was denied. Permitting the respondent to patch up its factual position in post-hearing submissions, or reconvening the hearing, would be procedurally unfair to these self-represented litigants. The respondent can lie in the bed the reply drafter made. Additionally, as I see it, facts were asserted in the written submissions that were not established on the record. They were not relied upon.
[34] The respondent’s written argument included the assertion that the appellants sought discretionary relief, asking the Minister to accept the 2022 withdrawal under the HBP. That is not reflected in the factual record.
[35] The respondent’s written argument stressed the wording in the parenthetical clause in s. 146.01(2)(d). The respondent argued that the Minister’s decision regarding a supposed request for discretionary relief was communicated in the notice of confirmation. That is not at all how discretionary relief programs, appeals and notices of confirmation work.
[36] As a matter of ordinary experience, correspondence by which the CRA delivers a conclusion will invariably refer to a taxpayer’s next steps. Correspondence concerning a failed voluntary disclosure or fairness application will be issued as a letter setting out the result, the reason, and would include advice for challenging the conclusion. A notice of confirmation would be expected to include next steps too, and that was the case here – the appellants were told they could appeal their assessments to the Tax Court. In case I have not made this sufficiently clear: the Minister did not communicate a decision concerning discretionary relief in the notice of confirmation in these cases.
[37] The respondent stuck to its guns (metaphorically) without raising any purported exercise of Ministerial discretion throughout the appeals process until it composed its written argument and filed it more than two weeks after the hearing. In this context, it would be unfair for the respondent to now try to make the assessments unappealable after all, because of an afterthought about how perhaps the Minister may have made a discretionary decision.
VI. Conclusion
[38] Counsel for the respondent argued that I cannot grant an equitable remedy, so if the application of the Act to the facts is right and the assessments are correct, that is the end of the matter. Of course, it is true that assessment disputes cannot be resolved based on the sympathies of the case. Therefore, I offer some further comments, to avoid any confusion about the basis for the reasoning and outcome in these appeals - it was not necessary for me to: decide anything based on the Minister’s assessing process or rely on that process to conclude the assessments were wrong; step outside the Tax Court’s jurisdiction to reach a conclusion regarding s. 146.01(2)(d); or make any impermissible foray into equitable principles. To the contrary, these reasons include none of that. Rejecting the respondent’s position concerning the application of s. 146.01(2)(d) is not based on a grouse about some notional, unproven exercise of Ministerial discretion, but rather an exercise of statutory interpretation and fact-finding, including permissible inferences, in a dispute that was appropriately and exclusively framed as an assessment dispute: the Minister assessed at the conclusion of a process that I infer included considering the parenthetical clause and she determined that the 2021 year-end RRSP balances were a problem; the assessing position was disputed at the appeals stage; the Minister expressly confirmed the basis for the assessment in a confirmation notice (including specifically advising that the next step was the Tax Court); and the respondent framed the dispute in terms articulated above. The assessing position (not the process of reaching it) was wrong because the Minister did not properly interpret and apply the deeming rule, which trumps the Minister’s notions about the limits of year-end RRSP balances.
Signed this 28th day of July 2025.
“J. A. Sorensen”
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