29 October 2003 External T.I. 2003-0036905 - LIFELONG LEARNING PLAN

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CCRA.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.

PRINCIPAL ISSUE :

Whether withdrawals from an RRSP is an "eligible amount" for the purposes of the section 146.02 if the amounts withdrawn exceed $10,000 in a calendar year or when the funds are coming from the same RRSP but for the taxpayer's studies and his or her spouse's studies?

Position: No in the both situations.

REASON :

Some conditions of the definition "eligible amount" in subsection 146.02(1) would not be met.

									2003-003690
XXXXXXXXXX 								Michelle Desrosiers,
  Notaire, M.Fisc.
October 29, 2003

Dear XXXXXXXXXX:

Re : Lifelong Learning Plan

This is in reply to your letter of September 3, 2003 in which you requested interpretation on the Lifelong Learning Plan ("LLP") rules. You have described the situation where you made two withdrawals from your spouse's Registered Retirement Savings Plan ("RRSP") in a calendar year. One of the withdrawals was for your studies and the other for your spouse's studies.

Written confirmation of the tax implications inherent in particular transactions are given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request. For more information concerning advance tax rulings, please refer to Information Circular 70-6R5 dated May 17, 2002. Copies of information circulars and other publications are available at your local Tax Services Offices or on the Internet at http://www.ccra-adrc.gc.ca/formspubs/menu-e.html. Where the particular transactions are completed, the enquiry should be addressed to the relevant Tax Services Office. However, we are prepared to provide the following general comments, which may be of assistance.

Section 146.02 of Income Tax Act (the "Act") sets out the rules governing the LLP. It allows an individual to withdraw an "eligible amount" from theirs RRSP to finance education for the individual or their spouse, without including the withdrawal in computing income.

The term of "eligible amount" as defined in subsection 146.02(1) of the Act means a particular amount received at a particular time in a calendar year by the individual as a benefit out or under a RRSP if certain conditions are met. One of the finding is that the total of the particular amount and all other eligible amounts received by the individual at or before the particular time and in the year not exceed $10,000, and the individual did not receive an eligible amount at or before the particular time in respect of which someone other than the designated person was designated.

Therefore, the total amount that can be withdrawn by the RRSP annuitant in a calendar year cannot be more than $10,000. Also, it requires that the RRSP annuitant designate the same person as was designated in respect of any eligible amount previously received by the RRSP annuitant in the current participation period. Consequently, an individual is permitted to withdraw funds in respect of the education of the individual or the individual's spouse, but the individual cannot have a positive LLP balance in respect of the education of more than one individual. It should be noted that this requirement does not preclude two RRSP annuitants who are married to each other from participating separately in the LLP and designating the same spouse as the designated person.

We trust that the above comments will be of assistance to you.

Yours truly,

for Director
Financial Industries Division
Income Tax Rulings Directorate