We are tying to file our taxes online with Intuit TurboTax 2014 for the first time and ran into an issue when trying to add our annual payment for the Home Buyers' Plan.
Error: "The designated repayment amounts for the Home Buyers' Plan cannot exceed your RRSP contributions for 2014."
In the past, we have filed with our accountant, but want to try it ourselves this time online for several reasons.
We have always had the same situation and yet managed to make our annual payments (about $1500) to the HBP program every year EVEN THOUGH we (me and my spouse) never contributed to our RRSP each year.
So our "RRSP contributions for 2014 eligible for repayment" for each of us is 0, since none of us contributed to our RRSP in many years but yet we cannot make our payment of $1500 each since it is greater than $0...
I do not understand how our accountant was able to do this, even though we never contributed to our RRSPs. I looked over the forms he filed last year with CRA, and the 'eligible contributions to RRSP' part was also $0, yet we still each made our $1500 payment.
What has been happening is this. When you don't make a repayment yourself, CRA automatically reports for you an amount of RRSP income, on which you then will be taxed at your marginal rate. Effectively they are saying ok mr and mrs taxpayer, you withdrew money from your RRSP to fund home purchase,and we then did not tax you on the withdrawal. But now we are,since you didn't repay us.
This is quite fair and written in the HBP rules. It is not a penalty, merely tax collection.
Check your 2013 Notice of Assessment,it should explain what CRA has done.
To repay HBP you have to contribute to an RRSP, alternatively the amount that you are required to repay can be included as RRSP income.
So since you haven't been contributing to RRSP, you accountant has been including the required payment as RRSP income. So do not indicate that you are making a HBP repayment cause you are not. You cannot since you haven't contributed to your RRSP.
But you will have to accept the addition of the annual repayment to your income as an RRSP withdrawal. (CRA treating your unpaid HBP loam amount as a permanent RRSP withdrawal).
If you wish to EFILE or NetFIle, "error" statements must be eliminated from your file setting
In that case, CRA will assess the additional income and tax payable by you.
If yo file on paper, you can add the HBP repayment amount as RRSP withdrawal.
I believe there are two separate places to add your repayment. One will relate to contribution of RRSP and the other will deal with non-contribution.