The Life Long Learning Plan allows you to withdraw up to $10,000 from your RRSP tax free to finance you or your spouses’ (or common law partners’) education. The education must be provided by a designated educational institution.
The repayment period is 10 years and begins at the earlier of:
- The second year after the last year you were enrolled in full-time studies, or
- The fifth year after the first LLP withdrawal.
After you have made repayments to your RRSP for the Home Buyer’s Plan (HBP) or Lifelong Learning Plan (LLP), you must complete Schedule 7 for each tax year your made repayments. If you do not assign RRSP contributions as repayments under the LLP or HBP, the CRA will reasses your return automatically and add the minimim repayment amout to your income for the year. In addition, your RRSP contributions reduce unused RRSP deduction room carried forward from prior years if they are deducted as regular RRSP contributions.
CRA Resources
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{ 2 comments… read them below or add one }
One thing I have noticed about the LLP is that when you take the money out of your RRSP you generally have a lower income than when you pay the money back into your rrsp. Considering that you pay the marginal rate on the LLP repayments, Is the LLP actually a good idea from a tax efficiency stand-point. Are you really paying a higher interest rate as tax than you could have gotten by borrowing the money? Would you be better to borrow the money from someone instead of borrowing from your RRSP?
Andrew,
Interesting thought. The concept behind the LLP is that you withdraw tax-free and repay the funds. The repayment is not a tax deduction but rather a replacement of the funds withdrawn. Effectively you get an interest free loan from your RRSP. You forego the investment income but you don’t pay any interest on the loan.
The comparison would have to be between what you forego in investment income versus the rate at which you would have borrow the same funds.