FAQs about EAPs

By: Sound Choices • August 9, 2018 • Personal Finance

RESP series

A Registered Education Savings Plan (RESP) is a tax-sheltered plan registered with the Canada Revenue Agency (CRA) that can help families save for their children’s post-secondary education.

Contributions made to an RESP grow tax free until the funds are withdrawn to pay when the beneficiary is registered at a qualifying educational program.



Q: What are EAPs?

A: When the child enrolls in a post-secondary educational program, there are two types of withdrawals options:

  1. Education Assistance Payments (EAPs): An EAP may consist of earnings or "accumulated income" and the grant itself. When withdrawn, this money is taxed in the hands of the beneficiary. Proof of enrolment in a post-secondary educational program is required.
  2. Post-secondary Capital Withdrawal: A Post-secondary Capital Withdrawal is a withdrawal of contributions made by the subscriber while a beneficiary is eligible to receive EAPs. The subscriber may withdraw their contributions without repaying any grant amounts or paying any tax.

Q: Is there a limit on the amount of EAPs a beneficiary may receive?

A: EAPs made to a beneficiary before he or she completes the first 13 consecutive weeks in a full-time qualifying educational program are limited to $5,000. Once this period is completed, the beneficiary can receive any amount of EAPs. Students requiring more than $5,000 in EAPs may apply to ESDC for permission to receive larger EAPs.

Part-time students are limited to $2,500 in each 13-week period of enrolment in a qualified post-secondary institution.


Q: What documentation is required?

A: AGF requires:

  1. A letter of direction (or AGF RESP Redemption Form) signed by the subscriber.
    The subscriber confirms the amount to be paid out and how much of the payment is EAP vs Post-secondary Capital Withdrawal.

  2. Proof of enrolment for the beneficiary.
    Documents must include all of the following information:
    • student name
    • reference to the semester (e.g., Fall 2018)
    • school name and address with either a logo or letterhead of the school
    • tuition costs and class load schedule or fee invoice (to help confirm full-time or part-time status)


Q: How are withdrawals made for educational purposes taxed?

A: EAPs (consisting of grant and income) are always taxed in the hands of the beneficiary – generally beneficiaries are in a lower tax bracket than the subscriber. For more information, contact a tax specialist.


Q: How much of the EAP is the CESG?

A: The portion of the EAP attributable to the Canada Education Savings Grant (CESG) is based on the ratio of grants paid into the plan to total investment earnings in the RESP. CESGs are limited to $7,200 per beneficiary. This is important to keep track of in family plans, where the CESG money is shared among the beneficiaries. For more information, read the articles on the CESG and family plans.


Q: How many years can the beneficiary who attends a qualified post-secondary institution receive EAPs?

A: According to the Income Tax Act (ITA), there are no specific restrictions on the number of years a beneficiary may attend post-secondary educational institution and receive EAPs. However, each RESP must be terminated no later than the 35th year after the year in which the original plan was opened.


For more information on RESPs, visit AGF.com/RESP or contact your financial advisor.

The contents of this Web site are provided for informational and educational purposes, and are not intended to provide specific individual advice including, without limitation, investment, financial, legal, accounting or tax. Please consult with your own professional advisor on your particular circumstances.