RESP Bulletin No.1R1

This bulletin cancels and replaces RESP Bulletin No.1, dated August 12, 2008, and has information on education assistance payments (EAPs) and registered educations savings plan (RESP) contributions.

Education assistance payments

An EAP is defined in the Income Tax Act as an amount, other than a refund of payments, paid out of an RESP to or for beneficiaries to help them to further their education at the post-secondary level. Under paragraph 146.1(2)(g.1) of the Act, an EAP may be paid to a beneficiary who is enrolled as a student in a qualifying educational program or is at least 16 years old and a student enrolled in a specified educational program at a post-secondary educational institution.

To help reduce the current administrative burden that promoters face when asked for an EAP, on August 12, 2008 we introduced an annual EAP threshold limit of $20,000, indexed annually by the consumer price index (see table below). On an administrative basis, we consider all legitimate EAP requests below this threshold to be acceptable. We do not expect promoters to assess the reasonableness of each expense item as long as the conditions permitting an EAP are met.

The $5,000 limit for the first 13 consecutive weeks of enrolment in the previous 12-month period remains. Prior to completion of the first 13 consecutive weeks of studies in the previous 12-month period, the Minister designated for purposes of the Canada Education Savings Act (CESA) is required to approve, on a case-by-case basis, an EAP amount that is substantially higher than the $5,000 limit stipulated in the Act.

While the $5,000 limit remains under the Act, the promoter does not need to determine if the request for an EAP is reasonable if the amount requested is within the annual limit.

RESP contributions

The October 2007 budget amended the Act and added the definition designated provincial program. The definition is relevant for deduction purposes under paragraph 60(x) and to the definitions of contributions and trust in subsection 146.1(1) of the Act. A designated provincial program is a program administered under an agreement entered into under section 12 of the CESA or is a prescribed program. This amendment applies to all specimen plans for the 2007 and later tax years. All specimen plans must be amended to add a definition of designated provincial program and to modify their definitions of contribution and trust to meet the requirements of section 146.1 of the Act.

How to contact us

Contact us at the Registered Plans Directorate if you have any questions about the RESP Bulletin.

Our telephone enquiries service is available Monday to Friday from 8:00 a.m. to 5:00 p.m., Eastern Time (with a voice mailbox system to take messages outside those hours):

In the Ottawa area:
For service in English, call 613-954-0419
For service in French, call 613-954-0930

Toll free from elsewhere in Canada:
For service in English, call 1-800-267-3100
For service in French, call 1-800-267-5565

Promoters of education savings plans who need guidance on specific registration issues can write to us at the Registered Plans Directorate, Canada Revenue Agency, Ottawa ON  K1A 0L5, or fax us at 613-952-0199

We welcome feedback on this bulletin. Email your comments to RPD.LPRA2@cra-arc.gc.ca.