7 December 2004 External T.I. 2004-0083021E5 - Lifelong Learning Plan

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.

Principal Issues: Whether a post-graduate student attending university outside Canada is considered to be enrolled as a full-time

Position: Question of fact.

Reasons: General comments provided and reference to ¶s 5 to7 of IT-515R2, Education Tax Credit

XXXXXXXXXX 									2004-008302
G. Moore
December 7, 2004

Dear XXXXXXXXXX:

This is in reply to your letter of June 19, 2004, requesting our views concerning the Lifelong Education Plan.

In particular, you are asking for our views with respect to whether you can withdraw funds from your registered retirement savings plan (RRSP) under the Lifelong Learning Plan (LLP) to complete your Ph.D at a university outside Canada. Part of this course requires you to physically spend 6 months at a university outside Canada.

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 Revenue Agency ("CRA").

Information concerning the LLP is available in the LLP guide (RC4112). A copy of the LLP guide and other CRA publications referred to herein, are available from your local tax services office or on the CRA website at the following address http://www.ccra-adrc.gc.ca/formspubs/menu-e.html.

The LLP permits an individual to withdraw an "eligible amount" from his or her RRSP to finance training or education for the individual or his or her spouse or common-law partner. In order to qualify as an "eligible amount" for LLP purposes, 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 "enrolled as a full-time student" and in a "qualifying educational program" must be satisfied. Unlike the requirements pertaining to the tuition credit for students enrolled in universities outside Canada, who have to be "in full-time attendance", as discussed in IT-516R2, Tuition Tax Credit, for purposes of the LLP, there is no requirement that the student actually be in physical attendance at a foreign university.

The term "full-time student" is not defined for purposes of the LLP. IT-515R2, Education Tax Credit, provides general comments regarding the CRA's interpretation of "full-time student". A student who is in regular attendance in a qualifying educational program is considered to be enrolled as a full-time student. Similarly, a student who is participating in post-graduate studies on a regular basis in a particular month is ordinarily considered to be enrolled as a full-time student if the student is registered for the regular academic year even though the requirements for attendance in class for such studies are minimal. Therefore, such a student who spends much of the time in a laboratory or library engaged in research or writing a thesis or who spends part of the academic year engaged in research elsewhere than at the university would normally be regarded as being a full-time student at the institution where the student is so registered. Furthermore, paragraph 5 of IT-515R2 indicates that the requirement for enrolment as a full-time student can be met by a student taking courses by correspondence or enrolled in a distance education program.

For purposes of the LLP, a "qualifying educational program" has generally been given the same meaning as for the purposes of the education tax credit except that the reference to "3 consecutive weeks" is changed to "3 consecutive months". Accordingly, for purposes of the LLP, a qualifying educational program must be at a designated educational institution for not less than 3 consecutive months duration and provide that each student taking the program spend not less than 10 hours per week on courses or work in the program. It is a question of fact whether a correspondent student spends the required 10 hours each week throughout the minimum three month duration on courses or work in the program. "Courses or work" can include practical training. A "designated educational institution" includes a university, college, and would also include a university outside Canada at which the student is enrolled in a course of at least 13 weeks duration, leading to a degree.

In your situation, you indicate that you would be participating in post-graduate studies at a university outside Canada and would be physically attending the university for 6 months. While it is a question of fact whether you would be considered a full-time student while participating in post-graduate studies at the university outside Canada, based on the information provided to us, assuming all the other requirements with respect to LLPs are met, it appears that you would be eligible to participate in the LLP.

We trust these comments will be of assistance.

Roxane Brazeau-LeBlond, CA
For Director
Financial Industries Division
Income Tax Rulings Directorate