When and how to make a repayment
You have over a period of 10 years to have to repay to your RRSP and/or PRPP and/or SPP. Generally,for each year of your repayment period, you have to repay 1/10 of the total amount you withdrew until the LLP balance is zero.
You will receive an LLP statement of Account each year with your notice of assessment or notice of reassessment. This statement will show the LLP withdrawals, your LLP balance, the amounts you have repaid to date, cancellations, income inclusions, and the amount you have to repay the following year.
The latest year you can start repaying your LLP withdrawals is the fifth year after your first LLP withdrawal. However, in most cases, you have to start repaying your withdrawals before that year.
See Examples – When and how to make a repayment (examples 1 and 2).
When to start repaying your LLP withdrawals
Answer a few questions to determine when you have to start repaying your LLP withdrawals. These questions do not cover cancelling your withdrawal. For that situation, see Cancelling your LLP withdrawal.
We determine when your repayment period starts by checking if the LLP student is a qualifying student for at least three months during the year. If the LLP student does not meet this condition two years in a row, your repayment period usually starts in the second of those two years. If the LLP student continues to meet this condition every year, your repayment period starts in the fifth year after your first LLP withdrawal.
In some cases, the LLP student is not a qualifying student for at least three consecutive months in any calendar year. This can happen if the program is short and the student starts it near the end of the year. In that case, your first repayment year is the second year after the year of your LLP withdrawal. If the student is not a qualifying student for three months in any year because the student left the program, see What happens if the LLP student leaves the educational program?.
Even if you become bankrupt, you still have to repay all your LLP withdrawals to your RRSPs. If you do not, you have to include the required amounts in your income each year as they become due.
How to make your repayments
To make your repayments, you have to contribute to your RRSP and/or PRPP and/or SPP in the repayment year or in the first 60 days of the following year. You can make the repayments to any of your RRSPs with any issuer, your PRPP, and to your SPP or you can open a new RRSP.
You have to designate your repayment for the year by completing Schedule 7, RRSP, PRPP and SPP Unused Contributions, Transfers, and LLP or LLP Activities (included in your income tax package), and file it with your income tax and benefit return for the repayment year.
You have to make your repayments to your RRSP and/or PRPP and/or SPP even if your RRSP deduction limit is zero or a negative amount. We do not consider an amount you designate as a repayment under the LLP to be an RRSP contribution. Therefore, you cannot claim a deduction for this amount on your income tax and benefit return.
See Examples – When and how to make a repayment (example 3).
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