15 May 2002 External T.I. 2002-0132555 - EAP PAYMENT LIMITS

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CCRA.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.

Principal Issues:

Can an educational assistance payment be made to a student before the end of the 13th consecutive week of being enrolled in a qualifying educational program at a post-secondary educational institution?

Position: Yes.

Reasons:

Educational assistance payments could be made in the first 13 weeks of enrollment but the aggregate amount that can be paid in that period is capped at $5,000 unless a greater amount is approved by the Minister of Human Resources Development.

Sue Waugh
Human Resources Development Canada
Program Policy 2002-013255
140 Promenade du Portage Phase IV M.P. Sarazin, CA
Hull QC K1A 0J9

May 15, 2002

Dear Ms. Waugh:

Re: Educational Assistance Payments

This is in reply to your electronic mail of April 4, 2002, requesting our views regarding the application of clauses 146.1(2)(g.1)(ii)(A) and (B) of the Income Tax Act (the "Act").

In the case of a registered education savings plan ("RESP") beneficiary's first enrollment in a qualifying educational program at a post-secondary educational institution, you are of the view that the beneficiary is not entitled to receive an educational assistance payment ("EAP") until the 14th week of being enrolled in the program. The expressions "registered education savings plan", "educational assistance payment" and "qualifying educational program" have the meanings assigned by subsection 146.1(1) of the Act. For discussion purposes, we shall assume that one of the conditions described in clauses 146.1(2)(g.1)(i)(A) and (B) is satisfied by the beneficiary of the RESP and that the RESP was established after 1998.

Comments

With respect to post-1990 RESPs, the payment of EAPs to the beneficiary under the RESP is limited to the amounts allowed under clauses 146.1(2)(g.1)(ii)(A) and (B) of the Act. Pursuant to subparagraph 146.1(2)(g.1)(ii) of the Act, for RESPs entered into after 1998, a $5,000 limit (or such greater amount as the Minister of Human Resources Development approves) was introduced on the amount of EAPs that can be paid after 1996 to an individual who is enrolled as a full-time student in a qualifying educational program before the individual has completed 13 consecutive weeks in the program. This $5,000 limit applies only until the individual has completed 13 consecutive weeks in the program. Thereafter, the individual is permitted to receive any amount of EAPs from the RESP provided the individual continues to be enrolled in the program.

We trust that the above comments will be of assistance to you.

Yours truly,

Roberta Albert, CA
for Director
Financial Industries Division
Income Tax Rulings Directorate