604.299.9274

Blog



Registered Education Savings Plan (RESP): Distribution of Funds

Amounts paid out of an RESP may be taxable, non-taxable, or may trigger a repayment of Government support. The taxation status of a receipt depends on whether it is considered an Educational Assistance Payment, a Refund of Contributions, or an Accumulated Income Payment.

Educational Assistance Payment (EAP) – An EAP is a taxable amount paid to a beneficiary (a student) from an RESP to help finance the cost of post-secondary education. An EAP consists of the Canada Education Savings Grant, the Canada Learning Bond, amounts paid under a provincial education savings program, and the earnings on the money saved in the RESP. The student includes the EAPs as income on their income tax return for the year the student receives them.

Refund of Contributions – The promoter can return contributions tax-free to the subscriber or beneficiary when the contract ends, or, at any time before. These payments are not considered income to the recipient. That said, a refund of contributions may, in some cases, trigger a repayment of Government support.

Accumulated Income Payments (AIP) – An AIP is an amount paid to the subscriber that relates to the income earned in an RESP. An AIP does not generally include: EAPs; payments to a designated educational institution in Canada; the refund of contributions to the subscriber or to the beneficiary; transfers to another RESP; or repayments under the Canada Education Savings Act or under a designated provincial program. An AIP is included in the income of the subscriber and is generally subject to an additional 20% tax rate, except where the amount is eligible for a rollover to another registered plan.

Consider the financial consequences, tax or otherwise, on withdrawing funds from an RESP.


Changes to Principal Residence Reporting Requirements

On October 3, 2016, the Government announced a change to Canada Revenue Agency’s administrative requirements relating to the sale or deemed disposition of a principal residence. Historically, CRA did not require the disposition or deemed disposition of a principal residence to be reported if the property qualified as principal residence for all years of ownership and no tax was payable. However, as a result of this very recent change, commencing with the 2016 calendar year, the sale of a principal residence must be reported whether or not any tax may be payable.

Please refer to CRA’s link: http://www.cra-arc.gc.ca/gncy/bdgt/2016/qa11-eng.html for more information on this matter or call our office to discuss.


Did you know? – CRA Service Complaints

In 2014–2015, 95.9% of taxpayer service complaints were resolved within 30 business days.

According to Canada Revenue Agency’s web page, service complaints can be about:

  • mistakes that could result in a misunderstanding or omission
  • undue delays
  • see service standards for normal processing times
  • employee behaviour
  • poor or misleading information other service-related issues

 

You may also make non-service-related complaints, provided that:

  • if it is about a delay, you have confirmed that it is outside of the current service standard;
  • If it is about any type of correspondence received, you have first contacted the relevant CRA department directly if you do not understand it or disagree with it

 

For other complaints and disputes, such as assessments, determinations, or decisions, see CRA’s web page for complaints and disputes.