If you repay less than the amount required or do not repay at all
If you designate an amount less than the amount you have to repay, you have to include the difference in your income on line 12900 of your Income Tax and Benefit Return. The amount you include in your income is equal to the amount you have to repay minus the amount you designate as a repayment for the year. The amount you include in your income cannot be more than the result of this calculation.
Your LLP balance is reduced by the amount you repay plus the amount you include in income. If you want to calculate the amount you have to repay for the next year, divide your LLP balance by the number of years remaining in your repayment period.
Josée makes a $10,000 LLP withdrawal in 2018 for a four-month qualifying educational program that finishes in the same year. For 2020, Josée's repayment is $1,000 ($10,000 ÷ 10). Josée contributes $700 to her RRSPs in 2020, and she files Schedule 7, RRSP,PRPP and SPP Unused Contributions, Transfers, and HBP or LLP Activities with her return to designate the $700 as a repayment under the LLP. Josée has to include $300 in her income on line 12900 of her 2020 Income Tax and Benefit Return. She determined as follows:
Amount she has to repay for 2020 ($1,000) − Amount she designates as a repayment on Schedule 7 ($700) = Amount she includes on line 12900 ($300)
She cannot claim a deduction for the $700 contributed to her RRSPs because she designated those contributions as a repayment under the LLP. In 2020, she will have to repay $1,000 ($9,000 ÷ 9).
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