Principal Issues: When may amounts be withdrawn from an RESP where the beneficiary is enrolled in an apprenticeship program as an automotive service technician?
Position: Question of fact.
Reasons: Provided general comments concerning when contributions may be returned out of an RESP and when educational assistance payments may be made.
XXXXXXXXXX 2006-020812 G. Allen October 2, 2006
Dear XXXXXXXXXX:
Re: Registered Education Savings Plan (RESP) Withdrawals
This letter is in response to your letter dated June 10, 2006 to the Summerside Tax Centre concerning whether you can withdraw funds from your son's RESP at a time when your son is enrolled in an apprenticeship program as an automotive service technician. The Summerside Tax Centre forwarded your letter to our Directorate on August 2, 2006 for our consideration and reply.
In your letter, you state that your son is enrolled in a program through the Ontario Ministry of Training, Colleges and Universities and has been working since January 2006 as an apprentice and your son will not be attending classes at XXXXXXXXXX College until the anticipated date of January 2007.
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). All publications referred to herein can be accessed on the CRA website at the following address: http://www.cra-arc.gc.ca/tax/technical/incometax/menu-e.html.
Our Comments
The CRA's general views concerning RESPs are contained in RC4092, entitled Registered Education Savings Plans. As stated on page 3 of RC4092, subject to the terms and conditions of the RESP, a promoter may return a subscriber's contributions to a subscriber at any time during the existence of the RESP. As well, a promoter can pay a subscriber's contributions to a beneficiary of an RESP without any tax implications (although there may be implications for purposes of the Canada Education Savings Grant program which is administered by the Department of Human Resources and Social Development).
An educational assistance payment (EAP) may be paid where the beneficiary is enrolled as a full-time or part-time student in a qualifying educational program at a post-secondary educational institution. The terms "qualifying educational program" and "post-secondary educational institution" are both defined in subsection 146.1(1) of the Income Tax Act. In general, a "post-secondary educational institution" is defined to include a university, college, or other designated educational institution in Canada. A "qualifying educational program" is defined as an educational program at the post-secondary school level that is at least three consecutive weeks long and that requires the student to spend not less than 10 hours per week on courses or work in the program. Accordingly, provided XXXXXXXXXX College considers your son to be enrolled as a full-time or part-time student and the educational program your son is enrolled in satisfies the definition of "qualifying educational program", your son would be eligible to receive an EAP from his RESP.
We trust our comments will be of assistance to you.
Yours truly,
Mary Pat Baldwin, CA
Manager
Financial Sector and Exempt Entities Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch