Registered Education Savings Plan (RESP) -
Education Assistance Payment (EAP) under the Income Tax Act (Act)

As you are an RESP promoter, we would like to seek your views on a guideline we wish to implement to alleviate some of the concerns about administering EAPs.

We are proposing to introduce a dollar limit, indexed annually on the basis of the Consumer Price Index (CPI), to help minimize the current administrative burden promoters face when an EAP is requested. Given the steady increase in post-secondary education costs, the increasing number of EAPs requested, the demand to pay fees up-front at enrolment, and the different socio-economic backgrounds of each beneficiary, we would like to establish an EAP threshold to assist promoters in determining the reasonableness of the amount requested.

Our research shows that it is reasonable to expect that most EAP requests would fall within a $20,000 limit. On an administrative basis, we will not question legitimate EAP requests below $20,000, nor will we expect promoters to assess the reasonableness of each expense item, as long as the conditions permitting an EAP are met. Prior to the completion of the first 13 consecutive weeks of studies, the Minister designated for purposes of the Canada Education Savings Act would still be required to approve, on a case-by-case basis, an EAP amount that is substantially higher than the $5,000 limit stipulated in the Act.

Please email your comments and/or concerns about this proposition before March 4, 2008 at RPD.LPRA@cra-arc.gc.ca . We will take your comments into consideration before finalizing our administrative guidelines.