8 July 2003 External T.I. 2003-0011245 - LLP ELIGIBILITY OF MEDICAL RESIDENTS

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 medical students who begin their residency participate in the lifelong learning plan?

Position: Question of Fact

Reasons: General information provided.

XXXXXXXXXX 2003-001124
Renée Shields
(613) 948-5273
July 8, 2003

Dear XXXXXXXXXX:

Re: Request for Technical Interpretation - Lifelong Learning Plan ("LLP")

This is in response to your electronic correspondence of April 1, 2003 inquiring whether medical residents are eligible to participate in the LLP.

Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5, Advanced Income Tax Rulings, dated May 17, 2002. Where the particular transactions are completed, the inquiry should be addressed to the relevant tax services office. The following comments are, therefore, of a general nature only and are not binding on the Canada Customs and Revenue Agency ("CCRA"). All publications referred to herein can be accessed on the CCRA website at the following address: http://www.ccra-adrc.gc.ca/tax/technical/incometax/menu-e.html.

The CCRA's general views regarding the LLP are contained in a guide entitled "Lifelong Learning Plan (LLP)" having reference number RC4112 ("LLP Guide").

The LLP permits an individual to withdraw an "eligible amount" from their registered retirement savings plan ("RRSP") to finance training or education for the individual or their spouse or common-law partner.

In order to qualify as an "eligible amount" within the meaning assigned by subsection 146.02(1) of the Income Tax Act (the "Act"), the designated person (the student attending school) has to be enrolled at the particular time as a full-time student in a "qualifying educational program" or must have received written notification before the particular time that the designated person is absolutely or contingently entitled to enrol before March of the following year as a full-time student in a "qualifying educational program." Thus, both the requirement that the student be a "full-time student" and that the student be enrolled in a "qualifying educational program" must be satisfied.

We recently reviewed the issue of the determination of "full-time student" and have maintained the position that the determination of whether a person is a "full-time student" is the responsibility of the educational institution.

In general, a "qualifying educational program", as defined for purposes of the LLP in subsection 146.02(1) of the Act, is an educational program at a "designated educational institution" that lasts for a period of not less than three consecutive months and requires that the student spend not less than ten hours per week on courses or work in the program. We note that, as indicated on page 5 of the LLP Guide, "courses or work" can include practical training. A "designated educational institution" is a university, college, or other educational institution that qualifies for the education amount in section 118.6 of the Act. You may refer to section 8 of IT-515R2 for a more detailed discussion of this term.

Whether an individual who is completing his or her medical residency is at that point full-time student enrolled in a "qualifying educational program" is a question of fact. Although we do not have enough information about any specific medical residency program or programs you may be dealing with, we have taken the position in other situations that medical residents would qualify for the tuition tax credit. It would be our position medical residents eligible for the tuition tax credit would also be able to participate in the LLP where the educational program lasts for a period of not less than three consecutive months.

You have also asked for our comments on the result if a withdrawal is made from an individual's RRSP for the LLP and it is subsequently determined that the individual is not eligible to participate. In such a situation, the amount withdrawn will not qualify as an "eligible amount" and will not qualify as an "excluded withdrawal" from the RRSP. As a result, the amount withdrawn is considered a benefit received under an RRSP in accordance with subsection 146(8) of the Act and the amount withdrawn will be included in the RRSP annuitant's income in the year of withdrawal. In accordance with subsection 146(8.01) of the Act, if the CCRA has already assessed the RRSP annuitant's tax return for the year of withdrawal, it will be reassessed to include the withdrawn amount. Interest will be charged and penalties assessed, if applicable.

We trust that these comments will be of assistance.

Yours truly,

Mickey Sarazin, C.A.

for Director
Financial Industries Division
Income Tax Rulings Directorate
Policy and Legislation Branch