8 August 2011 External T.I. 2011-0405491E5 - Are Moving Expenses deductible from RESP

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 student can deduct eligible moving expenses against RESP income.

Position: No.

Reasons: Section 62 does not provide for eligible moving expenses to be deducted against this source of income.

XXXXXXXXXX 							2011-040549
								C. Underhill
August 8, 2011

Dear XXXXXXXXXX :

Re: RESP Payments, Moving Expenses

I am writing in response to your e-mail of May 5, 2011 concerning whether a student can deduct eligible moving expenses against Registered Educational Saving Plan ("RESP") income reported on a T4A.

In the situation you described, a student is the beneficiary of an RESP. The student has no employment income and has not received any scholarships, fellowships, bursaries or research grants. The student has received RESP payments, specifically income and grant amounts which were reported on a T4A. You have indicated that the student has incurred eligible moving expenses and suggested that the RESP income can be classified as a "certain prize" in order for moving expenses to be deductible.

Our Comments

Written confirmation of the tax implications inherent in particular transactions may only be provided by this Directorate where the transactions are proposed and are the subject matter of an advance income tax ruling submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. This Information Circular and other Canada Revenue Agency ("CRA") publications can be accessed on the Internet at http://www.cra-arc.gc.ca. Where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office. We are, however, prepared to provide the following general comments.

In accordance with section 62 of the Income Tax Act (the "Act"), a taxpayer may deduct eligible moving expenses paid in respect of an eligible relocation from only specifically enumerated sources of income. Including, among others, employment income earned at the new work location and scholarships, fellowships, bursaries or prizes for achievement that are included in income under paragraph 56(1)(n) of the Act. RESP income taxed under paragraph 56(1)(q) of the Act is not one of those enumerated sources.

Further, paragraph 56(1)(n) of the Act specifically excludes as a scholarship, fellowship, bursary or prize, payments received from a RESP that are required to be included in income under paragraph 56(1)(q) of the Act. Consequently, eligible moving expenses are not deductible against amounts received from an RESP.

We trust these comments will be of assistance.

Randy Hewlett
Manager
for Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch