An RESP withdrawal is not as simple as taking money out — there are two distinct types, each with different tax treatment. Post-Secondary Education (PSE) withdrawals are the return of your own contributions: tax-free, no restrictions, you can take them any time the student is enrolled. Educational Assistance Payments (EAPs) contain government grants (CESG, Canada Learning Bond, provincial grants) and investment income: taxable in the student’s hands, capped at $8,000 in the first 13 weeks of full-time enrolment, unlimited after that. Getting this split right ensures your student pays little or no tax on their education funding.
Quick answer: Withdraw contributions (PSE) first — tax-free. Then take EAPs in the student’s name — taxable but usually at near-zero rates given student income levels. Keep EAP withdrawals in the first 13 weeks under $8,000 per full-time student. After week 13, withdraw as much as needed.
Two Types of RESP Withdrawals
| Type | What It Contains | Taxable? | Cap in First 13 Weeks |
|---|---|---|---|
| PSE (Post-Secondary Education) | Subscriber’s contributions only | No — tax-free | No cap |
| EAP (Educational Assistance Payment) | Government grants + investment income | Yes — in student’s hands | $8,000 (full-time) / $4,000 (part-time) |
When you request a withdrawal from your RESP provider, you specify how much is PSE and how much is EAP. Your RESP provider will issue a T4A slip to the student for EAP amounts received.
How EAP Withdrawals Are Taxed
EAP amounts are added to the student’s income for the year. Because most students have little or no employment income, the federal and provincial basic personal amounts shelter much or all of the EAP from tax:
- Federal basic personal amount 2026: ~$16,129
- Tuition tax credit: reduces tax further by the tuition fees paid
- Student loan interest deduction and education credits: further reduce tax
Example — typical EAP tax situation:
Emma starts university in September 2026. Her only income is $20,000 in EAP withdrawals.
- Basic personal amount: ~$16,129
- Taxable income: $20,000 − $16,129 = $3,871
- Federal tax at 15%: $580
- Tuition credit (15% × $8,000 tuition): $1,200
- Tax after credits: $0
In most cases, a student with RESP income under $30,000 and tuition credits pays minimal or no federal tax.
The First 13-Week Cap on EAPs
The most important rule for early withdrawals: you cannot take more than $8,000 of EAP in the first consecutive 13 weeks of a full-time qualifying program (Budget 2023 increase from $5,000). After the student has completed 13 consecutive weeks of enrolment, there is no cap.
Practical strategy: Take the maximum $8,000 EAP in the first 13 weeks (for tuition, books, housing), then continue withdrawing EAPs as needed each semester with no upper limit.
For part-time students, the first 13-week cap is $4,000.
Proof of Enrolment Required
Before your RESP provider releases EAP funds, they must verify enrolment. Accepted proof includes:
- Official enrolment letter from the institution
- Tuition receipt or invoice
- Student ID with enrolment confirmation
Proof of part-time enrolment requires documentation showing the student is enrolled in at least 12 hours/week of courses in programs lasting at least 3 consecutive weeks.
CESG and Grant Repayment
Government grants in an RESP must be repaid to the federal government if the RESP is closed and the beneficiary has not attended qualifying school. Specifically:
- Canada Education Savings Grant (CESG): 20% of contributions (max $500/year; lifetime max $7,200)
- Canada Learning Bond (CLB): up to $2,000 for low-income families
- Provincial grants (BCTESG, QESI, SAGES where applicable): repaid to provincial governments
Grants are repaid when:
- An Accumulated Income Payment (AIP) is taken
- The RESP is closed without an eligible beneficiary
- The beneficiary never enrols
Grants are NOT repaid when:
- The beneficiary completes their program
- The beneficiary is switched to another eligible family member
- Funds are transferred to another RESP
If Your Child Does Not Attend Post-Secondary School
Several options exist — ranked from best to worst:
Option 1: Change the beneficiary Transfer the RESP to a sibling, cousin, or other eligible family member. Grants transfer with the funds (subject to lifetime CESG limits for the new beneficiary). No tax consequences.
Option 2: Keep the RESP open Wait — students can return to school later. An RESP can stay open for up to 35 years from the date it was opened. A child who enrolls at age 25 or 30 can still use the RESP.
Option 3: Transfer accumulated income to RRSP If the RESP has been open for at least 10 years, all beneficiaries are at least 21 and not currently enrolled, you can transfer up to $50,000 of accumulated income directly to your RRSP (or spousal RRSP) without penalty — provided you have RRSP contribution room. Grants must be repaid first.
Option 4: Take an Accumulated Income Payment (AIP) You receive the investment earnings (not the contributions, which come back tax-free separately). AIP is taxed at your full marginal rate PLUS a 20% additional tax. Grants are repaid. This is the most expensive option and should be a last resort.
Option 5: Transfer to RDSP If the beneficiary has a disability and qualifies for a Registered Disability Savings Plan (RDSP), you can transfer up to $50,000 of accumulated income to their RDSP tax-free. A major advantage for families with a disabled child.
Related Canadian Education and RESP Resources
- RESP Guide — how RESPs work, CESG, and contribution limits
- RESP Contribution Limits — lifetime limit, CESG matching, and provincial grants
- RRSP Contribution Limit 2026 — if transferring RESP to RRSP
- CA Retirement Hub — all Canadian savings and retirement guides
RESP withdrawals are most tax-efficient when EAPs are claimed in the student’s name while they have low or no other income. Plan the withdrawal sequence each year: take tuition receipts to your RESP provider, request EAPs up to the grant-funded portion of the balance, and take the remainder as PSE withdrawals if needed.
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