If you’re planning to go back to school in September you can use the money you’ve saved for tuition for a quick tax bonus – but only if you act soon.
Personal Tax Advisors:
Next Level Tax Preparation
Next Level Tax Preparation means support for our clients when CRA comes calling.
At Personal Tax Advisors, our responsibility continues long after your return is filed. Our job isn’t done until everyone is satisfied with the return, and that includes the Canada Revenue Agency.
If the Canada Revenue Agency ever contacts you about a return filed by Personal Tax Advisors, we’re here to guide you through the process. At any time during the year you can contact the person who completed your return to help with any requests from CRA or provide any support or information you need.
When it’s time to get serious about your taxes and your life, it’s time to move up to the next level of tax preparation.
The Canada Revenue Agency encourages continuing your education via the Lifelong Learning Plan, or LLP. Under this program you may make a taxfree withdrawal from your RRSPs when you are entering an educational program as a fulltime student for at least three consecutive months in a given year.
What this means is that if you have money set aside for schooling, you can contribute that money to your RRSP and get the usual tax deduction for the contribution, then take it out again taxfree under the LLP.
The catch: the money you withdraw must have been in your RRSP for at least 90 days before you make the withdrawal. So if you are starting with nothing (or not enough) in your RRSP to cover your LLP withdrawal, you need to bump it up at least 90 days before your planned withdrawal.
For people starting school in September, that means you want to get your contribution in by early June at the latest.
Conditions:
- You must have enough contribution room in your RRSP;
- If you have made an LLP withdrawal in the past, you must have paid that one back before you can start a new one;
- You must be enrolling in a program that issues T2202 education slips (check with your education institution; they’ll be able to tell you whether they will be issuing you a slip for your program;
- Your program must make you a fulltime student for at least three consecutive months each year (again, check with your education institution);
When it’s time to make your LLP withdrawal, be sure to tell your bank that’s what you’re doing so that they do the withdrawal properly and don’t trigger a tax bill.
You will have to repay your LLP withdrawal back into your RRSP in order to avoid tax in the future. Repayments begin two years after the end of your fulltme program or five years after your withdrawal, whichever comes first. From that point you have 10 years in which to repay the full amount.
Learn more at CRA’s website here:
http://www.craarc.gc.ca/tx/ndvdls/tpcs/rrspreer/llpreep/menueng.html
Booking an appointment:
Contact our scheduling manager at scheduling@personaltaxadvisors.ca to set up an appointment. Let us know which tax year(s) you’re filing, whether you have self-employment income, and whether you’re a new or returning client and we’ll get you set up ASAP.
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