The Life Long Learning Plan (LLP)

by Tax Guy - Burlington Accountant on January 4, 2011 Print This Post Print This Post

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

  • CRA – Lifelong Learning Plan

About The Tax Guy...

Dean Paley CGA CFP is a Burlington accountant and financial planner who services individuals and business owners locally, nationally and internationally. Dean has appeared in the National Post, Toronto Star and Metro News.

To find out more, visit Dean's website Dean Paley CGA CFP or connect via Twitter @DeanPaleyCGACFP.

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{ 6 comments }

Andrew March 17, 2011 at 7:21 pm

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?

Tax Guy March 18, 2011 at 6:40 am

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 The repayment is not a tax deduction but rather a replacement of the funds withdrawn.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.

Lisa February 19, 2012 at 6:09 pm

When I took out of my RRSP to pay for tuition I didn’t take it out as an LLP amount i.e. I didn’t have the form filled out by my financial institution. Can I go back and fix? The money was transfered to my bank account and income tax was withheld.

Tax Guy February 19, 2012 at 9:03 pm

Lisa,
If you did the withdrawal in 2012 or 2011, you may be able to make the change. If it was in 2011, you’ll need to discuss this with your FI and request that they re-desinate the withdrawal under the LLP.

There are no guarantees they will do it.

Cindy March 5, 2012 at 2:25 pm

I used $10,000 of my RRSP for tuition through LLP. I used half of it in June/11 for the 1st term of tuition and the other half in Jan/12 for the 2nd term. Last week I received a T4RSP form in the amount of $10,000 from my RRSP issuer and I can only claim the $5,000 for tuition paid in 2011. Is there a way to present this on my 2011 and 2012 tax returns that would benefit me most.

Tax Guy March 5, 2012 at 4:19 pm

Cindy,
If the withdrawal was under the LLP, then there is no immediate tax implication and it really does not matter. I would say claim it all for 2011 since the annula limit is $20,000.

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