• Definition of the Lifelong Learning Plan (LLP)
• Overview
• Eligibility 
• Withdrawals
• Repayments
   

Definition
 

• The Lifelong Learning Plan (LLP) lets you withdraw up to $10,000 tax-free annually from your RRSP to cover tuition fees. The limit is $20,000 over four years. Repayments begin in the fifth year after the first withdrawal.
   

Overview
 

• An LLP student can be either you or your spouse or common-law partner. You cannot name your child as an LLP student. The LLP student must enrol in a qualifying educational program at a designated educational institution, usually on a full-time basis. If the LLP student meets the disability conditions, he or she can enrol on a part-time basis.
   

Eligibility 

All of the following conditions must be met:
 

1. The student must be considered a full-time student (or a part-time student if he or she meets the disability conditions).
   
    
   • The educational institution determines whether the student is enrolled full time according to its regulations.
     
      
2. The annuitant (plan owner) must be a resident of Canada.
    
3. The student must be enrolled in a qualifying educational program at a designated educational institution.
    

• A designated educational institution is a university, college, or other educational institution that qualifies for the education tax credit you can claim on your tax return.
   
• An educational institution located in Canada and recognized by Human Resources and Social Development as offering courses (other than university-credit courses) to acquire or upgrade the skills needed to carry out a professional activity (e.g.: professional secondary level courses).
   
• A foreign university that offers courses of at least 13 consecutive weeks in duration and for which a diploma is issued.
   
• A university, college or other teaching institution located in the United States that offers post-secondary courses, for a student who regularly travels between Canada and the United States.
   
• An educational institution can include a professional organization located in Canada that offers courses to its members if one of the eligibility requirements is to have a high school diploma.
   
• An establishment located in Canada or the United States that is recognized under the Canada Student Loans Act, the Canada Student Financial Assistance Act or the Act Respecting Financial Assistance For Educational Expenses (Quebec) is deemed to be eligible.
   

Withdrawals
 

• You can withdraw up to $10,000 in a year from your RRSPs under the LLP. This is your annual LLP limit. The amount you withdraw is not limited to the amount of your tuition or other education expenses. Your spouse or common-law partner can also withdraw up to $10,000 from RRSPs under the LLP in the same year you do, but you cannot, however, withdraw more than the total LLP limit of $20,000 each time you participate in the LLP..
   
• Your LLP withdrawal does not affect the amount you can then contribute to an RRSP and deduct from your income on your tax return(s). You can continue to make contributions to RRSPs even after you've made an LLP withdrawal.
   
• You cannot withdraw funds from your locked-in RRSPs or your locked-in retirement account.
   
• Contributions paid into an RRSP less than 90 days before the LLP withdrawal must not be included in the withdrawal if you want to avoid adverse tax consequences; any portion of such contributions that exceeds the RRSP balance after the LLP withdrawal will not be deductible from taxable income. Whether or not contributions are deductible depends on the following: If immediately after the LLP withdrawal, the RRSP balance is equal to or greater than the amount contributed to the RRSP, you can deduct the entire contribution. If, however, immediately after the LLP withdrawal, the value of the RRSP is less than the amount contributed to the RRSP, you cannot deduct all or part of the contribution. Even if RRSP contributions aren't deductible, however, the LLP withdrawal remains eligible if all applicable conditions are met.
  
  Example:
  RRSP balance as at January 31          $4,000
  Contribution made on February 14         $2,000
                                                          $6,000
  LLP withdrawal on May 11                 ($5,200)
  RRSP balance after LLP withdrawal       $800
  
  Given that a $2,000 contribution was made on February 14, which is within the 90 days preceding the $5,200 LLP withdrawal, $1,200 ($2,000 - $800) will not be deductible as an RRSP contribution because the balance after the LLP withdrawal is only $800.
  
  To avoid tax consequences, the LLP withdrawal should have been $4,000 (January 31 balance), or the $5,200 should have been withdrawn on May 15 (May 14 in a leap year) or later, once the 90 days between the deposit and the withdrawal date had elapsed.
   
• This results in a form of double taxation since the contributions withdrawn under the LLP that are not deductible must be repaid into the RRSP within 10 years as per the LLP repayment rules, and will still be taxable once they are eventually withdrawn from the RRSP.
   

Repayments

Repayment start date

RRSP repayments under the LLP must be made over a period of no more than 10 years. In each year of your repayment period, you have to repay 1/10th of your original LLP balance until the full amount is repaid. The start date for the repayments depends on the status of the student.
 

If the student is not entitled to the education amount for a full-time student, the repayment start date is the earlier of the two following dates:
 

• The second year that follows the year where the student was entitled for the last time to the education amount on his or her federal tax return ($400 per month of study indicated on form T2202A).
   
• The fifth year that follows the year of the initial withdrawal.
   

Repayment amount

Repayments are made over a maximum period of 10 years, in the amount of 1/10 each year of the total of the amounts withdrawn each year until the full amount is repaid.

A repayment made in a given calendar year or in the 60 days that follow may be applied to that year.

If an LLP participant repays an amount that is lower than the planned annual amount, the unpaid portion in a given year is added to his or her taxable income for the year. The amount included in the income cannot exceed the amount to be repaid for the year.