When and how to make a repayment

You have up to 10 years to make repayments to your RRSPs. Usually, each year you have to repay 1/10 of the total amount you withdrew until the full amount is repaid. You do not have to pay any interest on the amounts you withdrew.

You will receive an LLP Statement of Account each year on your notice of assessment or notice of reassessment. This statement will show the total LLP withdrawals, the amount you have repaid to date, your LLP balance, and the amount you have to repay the following year.

The latest year you can start repaying your LLP withdrawals is the fifth year after your first LLP withdrawal. However, in most cases, you have to start repaying your withdrawals before that year. See Examples - When and how to make a repayment (examples 1 and 2).

When to start repaying your LLP withdrawals

Answer a few questions to determine when you have to start repaying your LLP withdrawals. These questions do not cover cancelling your withdrawal. For that situation, see Cancelling your participation in the LLP.

We determine when your repayment period starts by checking on line 323 of the LLP student's tax return to see if the student was entitled to the education amount as a full-time student for at least three months. If the LLP student does not meet this education amount condition two years in a row, your repayment period usually starts in the second of those two years. If the LLP student continues to meet this condition every year, your repayment period starts in the fifth year after your first LLP withdrawal.

When LLP student is not entitled to the education amount

In some cases, the LLP student is not entitled to the education amount for three months in any calendar year. This can happen if the program is short and the student starts it near the end of the year. In that case, your first repayment year is the second year after the year of your LLP withdrawal. If the student is not entitled to the education amount for three months in any year because the student left the program, see Student leaves school or does not enrol in time.

It is possible to participate in the LLP even if the LLP student does not qualify for the education amount on line 323 of his or her tax return. The LLP student may not be able to claim the education amount because he or she is receiving a reimbursement, benefit, grant, or allowance for the educational program. If it is only for one of these reasons that the LLP student cannot claim the education amount, you can still participate in the LLP. However, we may ask you for documentation to show that you qualify to participate in the LLP.

Note
Even if you become bankrupt, you still have to repay all your LLP withdrawals to your RRSPs. If you do not, you have to include the required amounts in your income each year as they become due.

How to make your repayments

To make your repayments, you have to contribute to your RRSPs in the repayment year or in the first 60 days of the following year. You can make the repayments to any of your RRSPs with any issuer, or you can open a new RRSP.

You cannot designate a contribution you made to your spouse's or common-law partner's RRSPs (or a contribution your spouse or common-law partner made to your RRSPs) as a repayment under the LLP. You have to designate your repayment for the year by completing Schedule 7, RRSP Unused Contributions, Transfers, and LLP or LLP Activities, and filing it with your tax return for the repayment year.

You have to make your repayments to your RRSPs even if your RRSP deduction limit is zero or a negative amount. We do not consider an amount you designate as a repayment under the LLP to be an RRSP contribution. Therefore, you cannot claim a deduction for this amount on your return.

See Examples - When and how to make a repayment (example 3).

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