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: General questions concerning education assistant payments from an RESP
Position: General comments provided
Reasons: wording of the legislation
2006-018631
XXXXXXXXXX Kimberly Duval
(613) 599-6054
June 13, 2006
Dear XXXXXXXXXX:
Re: Education Assistance Payment from a Registered Education Savings Plan
This is in response to your recent e-mail correspondence of May 11, 2006 and your subsequent telephone conversation with Kim Duval of our office on May 31, 2006, requesting our written comments with respect to an education assistance payment (an "EAP") made to the beneficiary of a registered education savings plan (an "RESP"). Specifically, you have asked us to comment on the tax implications of such payments and whether it is the beneficiary, as the recipient of the payment, or the plan subscriber as the contributor, who is taxable on an EAP.
The situation outlined in your e-mail appears to relate to a factual one, involving a specific taxpayer. It is not this Directorate's practice to comment on proposed transactions involving specific taxpayers other than in the form of an advanced income tax ruling. Although we cannot comment on your specific situation, we are prepared to provide the following general comments, which may be of assistance. Copies of our publications referred to in this letter are available on our web site at http://www.cra-arc.gc.ca/formspubs/menu-e.html.
An EAP is defined in subsection 146.1(1) of the Income Tax Act (the "Act") as any payment, other than a refund of payments, made to a designated beneficiary under an education savings plan to assist the beneficiary to further his or her post-secondary education. Specifically, EAPs represent accumulated earnings within an RESP including the Canada education savings grant plus any income, net of any realized losses, earned within the plan and by definition, excludes a return of all or part of the contributions made by, or on behalf of, a subscriber under the plan. It is the beneficiary who must include EAPs in his or her income in the year received, pursuant to subsection 146.1(7) of the Act.
For further information concerning RESPs, please refer to the Information Circular 93-3 entitled Registered Education Savings Plans.
We trust our comments will be of assistance to you.
Yours truly,
John Oulton, CA
for Director
Financial Sector and Exempt Entities Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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