Lucas starts a college program in Ottawa. His family asks the RESP provider for $6,000 to help with school costs. The confirmation divides it into $4,000 of educational assistance payments and $2,000 of returned contributions.
The bank deposit is one total. The tax treatment has two parts.
Ask for the breakdown before requesting funds
Educational assistance payments, or EAPs, contain grants, bonds and accumulated earnings and are generally income of the student. A return of contributions is generally tax-free. Contributions were not deductible when paid into the RESP.
Lucas keeps the provider's breakdown so he can compare the taxable portion with the T4A. He does not report the entire $6,000 as taxable merely because it arrived in one deposit, or assume all of it is tax-free because the family originally supplied money.
Confirm enrolment and the applicable payment limit
The provider needs proof that the student and program meet the conditions. For qualifying full-time studies, the usual EAP limit is $8,000 during the first 13 consecutive weeks. For qualifying part-time studies, the usual limit is $4,000 for the relevant 13-week period. Higher EAP requests require the applicable approval process.
These limits concern EAPs, not a blanket prohibition on also withdrawing available contributions under the plan's rules. The provider should explain the proposed payment mix and any grant-repayment consequences before processing it.
After 13 consecutive weeks in a qualifying full-time program, the $8,000 initial limit no longer applies while the student continues to qualify. It can apply again if a 12-month period passes without 13 consecutive weeks in a qualifying program. A return to school after a long break therefore needs a fresh check; reasonable education costs and the plan's terms still matter. CRA's EAP limits and restart rule.
Plan around actual school costs and income
EAPs can support reasonable education expenses beyond tuition, such as books, transport and rent. Lucas keeps enrolment evidence and the expenses the provider requests.
He also estimates employment income alongside taxable EAPs. Being a student does not make all income tax-free, and a tuition credit is not the same thing as excluding an EAP from income. A dated withdrawal plan helps the family cover expenses without losing track of which amounts belong on Lucas's return.
