RESP Withdrawals Explained: EAP vs Contribution Withdrawal and Why the Difference Matters

Two withdrawal types, two different tax outcomes

An RESP holds three kinds of money: the subscriber's original contributions, government grants such as the Canada Education Savings Grant , and the investment growth on all of it. When you withdraw, you choose which pool the money comes from, and that choice decides who owes tax.

An Educational Assistance Payment, or EAP, pays out grant money and growth. It counts as taxable income for the student named as beneficiary, not the parent or subscriber who contributed. A contribution withdrawal, sometimes called a Post-Secondary Education payment or PSE, returns the subscriber's own deposits and is never taxed, since that money was already taxed before it went into the RESP. See the Canada Education Savings Program's EAP guidance for the full breakdown.

Why most families take the EAP first

Students usually have low or no income while studying, so an EAP taxed in the student's hands often results in little to no tax owed once the basic personal exemption and tuition credits apply. Contributions stay tax-free no matter when you withdraw them or who receives them, so holding them back costs nothing in tax. Taking the EAP portion first, while the student's income is at its lowest, then drawing contributions later as needed, keeps the tax bill as low as possible across the whole program.

The $8,000 limit in the first 13 weeks

For a student in full-time post-secondary studies, EAP is capped at $8,000 during the first 13 consecutive weeks of enrollment in the program. Budget 2023 raised this cap from $5,000, and the change received Royal Assent on June 22, 2023. Part-time students face a $4,000 cap for the same period, raised from $2,500.

Once the student completes those first 13 consecutive weeks, the cap disappears, and the promoter releases EAP amounts without that limit, as long as the student still meets the enrollment requirements. A family needing more than $8,000 during those first weeks, for a compressed program with heavy upfront costs, has the option to ask the promoter to request an exception from the Minister responsible for the Canada Education Savings Act, through the Canada Education Savings Program, on a case-by-case basis.

A simple example

A student starting a full-time program with $15,000 in first-term costs could take the maximum $8,000 as an EAP during the first 13 weeks, taxed in the student's hands at a low or zero rate, and cover the remaining $7,000 as a contribution withdrawal, which is never taxed. The split depends on how much room is left in the EAP pool and how much the subscriber contributed over the years, so check both balances with your promoter before requesting either type.

How to actually request each type

• Contact your RESP promoter, the bank, credit union or investment firm holding the plan, rather than the government directly.

• For an EAP, the promoter needs proof of enrollment, usually a letter or document from the school confirming the student is registered in a qualifying program.

• For a contribution withdrawal, the subscriber requests it directly. No enrollment proof is required, since it is simply a return of the subscriber's own money.

• State which type of withdrawal you want on the request form. Promoters process these separately, and picking the wrong one changes who receives the tax slip.

What to check before you withdraw

Ask your promoter which tax slip goes to whom. EAP amounts generate a T4A in the student's name. Confirm the student's program qualifies as a recognized post-secondary program, generally at least 3 consecutive weeks and 10 hours a week of study for full-time status, before requesting an EAP. A program that does not qualify turns the payout into a non-qualifying withdrawal with different tax and grant repayment consequences, so ask the promoter to confirm your program's status before you submit the request.