ELI5 summary
How much you can take out
- Up to $10,000 in a calendar year.
- Up to $20,000 in total over the participation period.
You can keep making withdrawals until January of the fourth year after the year of your first one, as long as you stay within both limits and the student remains eligible. Your financial institution does not withhold tax on an LLP withdrawal when you give it form RC96, the LLP request.
Both you and your spouse or common-law partner can participate at the same time, each withdrawing from your own RRSP, so a couple can access up to $40,000 between them. The student can be you or your spouse; you cannot use the LLP to pay for a child’s education. For that, see RESP basics.
Who and what qualifies
The student must be enrolled, or have a written offer to enrol before March of the following year, in a qualifying educational program at a designated educational institution. In broad terms:
- Full-time: the program lasts at least three consecutive months and requires at least 10 hours a week of courses or work in the program.
- Part-time only if the student meets the disability conditions set out by the CRA.
- Designated institutions include Canadian universities, colleges and other institutions certified for the tuition credit, and many universities outside Canada.
You must be a resident of Canada to withdraw. The money does not have to be spent on tuition; it can cover living costs while you study.
The 90-day rule
If you contribute to your RRSP and then withdraw the same money under the LLP within 90 days, part or all of that contribution may not be deductible. Money that has been in the RRSP for at least 90 days before the withdrawal is not affected. If you plan to fund an LLP withdrawal with a fresh contribution, make it at least 90 days in advance.
Repaying the plan
The repayment period is ten years. The first repayment is due in the earlier of:
- the second year after the last year the student was enrolled full-time for at least three months; and
- the fifth year after the year of the first withdrawal.
Each year you must repay at least one-tenth of the total withdrawn, unless you have already repaid more. Your Notice of Assessment shows the amount due and the remaining balance.
Worked example
Sam withdraws $10,000 in 2026 and $10,000 in 2027 to fund a two-year full-time diploma, finishing in 2027. The second year after the last year of full-time study is 2029, and the fifth year after the first withdrawal is 2031, so repayments start in 2029, the earlier of the two. Sam must repay at least $20,000 ÷ 10 = $2,000 a year from 2029 to 2038.
How to make a repayment. Contribute to any of your RRSPs, then designate the amount as an LLP repayment on Schedule 7 of your return. Contributions made in the first 60 days of the following year can be designated for the previous year’s repayment. A designated repayment is not deductible, because the original withdrawal was never taxed.
If you miss a payment. Any shortfall between the required repayment and what you designate is added to your income for that year and taxed at your marginal rate. It does not accumulate; the rest of the schedule continues as before. You can also pay more than the minimum in any year, which reduces what is required in later years.
If the student does not finish
If the student leaves the program, the LLP generally continues and repayments start on the normal schedule. In some situations, such as when the student did not complete the program and did not meet certain conditions, the withdrawal can be cancelled by repaying it, or the amount becomes taxable income. Check the CRA’s rules on cancelling an LLP withdrawal before deciding what to do.
Leaving Canada or dying with a balance
- Becoming a non-resident: repay the remaining balance before you file your return for the year you leave, or within 60 days of becoming a non-resident if that is earlier. Anything not repaid is added to your income for that year.
- Death: the remaining balance is included in income on the final return, unless your spouse or common-law partner elects to take over the repayments.
Is it a good idea?
The LLP is interest-free, and for someone moving from a working income to a student income it avoids paying tax on an RRSP withdrawal at all. The real cost is that the money stops growing tax-sheltered while it is out of the plan. It tends to suit people who already have RRSP savings and would otherwise take on expensive debt to study. Compare it with any student aid you qualify for before withdrawing.
Show the math
Annual withdrawal limit $10,000; participation-period limit $20,000; withdrawals permitted until January of the fourth year after the year of the first withdrawal while the student qualifies. Repayment start year = min(second year after the last year the student was a full-time student for at least 3 months, fifth year after the first withdrawal). Minimum annual repayment = total withdrawals ÷ 10, less any excess repaid earlier. Shortfall is included in income for the year (reported on the T1). Contributions withdrawn within 90 days of deposit under the LLP are not deductible to the extent the RRSP balance after the withdrawal is less than the contribution. A new participation period may begin after the balance reaches zero.
Key takeaways
- Up to $10,000 a year and $20,000 in total, tax-free, for full-time study by you or your spouse.
- Repayments start by the fifth year after the first withdrawal, at one-tenth a year.
- Missed repayments become taxable income; extra repayments reduce later ones.
- Keep money in the RRSP at least 90 days before withdrawing it under the LLP.