The latest federal budget includes changes to the Income Tax Act (ITA) that change the amounts that students can withdraw from their RESP accounts. Here are the facts of the proposed changes:
- The current rules allow for a student in full-time post-secondary education to withdraw a maximum of $5,000 in education assistance payments (EAPs) from their RESPs during their first 13 weeks of enrollment. Part-time students can currently withdraw $2,500 in the same period. The EAPs are considered taxable income.
- The federal budget proposes amendments to the ITA which would enable full-time students to withdraw up to $8,000 of EAPs in the 13-week period. For part-time students, the withdrawal maximums will increase to $4,000 in the same 13-week period.
- The federal budget also proposes amendments which would allow divorced and separated parents to open joint RESPs for their children. Previously, only married or common-law spouses could open RESPs.
[At the time of writing this article, the budget had not yet received Royal assent.]
(Source: CEIRP’s law firm, Koskie Minsky)