What is the requirement if a participant does not repay their Home Buyer's Plan loan?

If a participant does not repay their Home Buyer's Plan (HBP) loan, they are required to pay taxes on the unrepaid amount. The HBP allows individuals to withdraw funds from their Registered Retirement Savings Plan (RRSP) to buy or build their first home. To avoid penalties, the participant must repay the amount withdrawn back into their RRSP within a specified timeframe, typically over a 15-year period.

If the repayments are not made as required, the Canada Revenue Agency (CRA) treats the unrepaid portion as income for the year, resulting in a tax liability. This ensures that the benefits of the HBP are preserved and encourages participants to comply with the repayment schedule. Understanding this requirement emphasizes the importance of managing one's finances responsibly when utilizing programs like the HBP.