The question pertains to the subject of the Lifelong Learning Plan (LLP) for Residents of Canada who are eligible to set up and withdraw from a RRSP (Registered Retirement Savings Plan) in accordance with the Canadian Income Tax Act.
To learn more go to the Canada Revenue Agency (CRA) web site at www.canada.ca/taxes where you will find information about this subject in their Lifelong Learning Plan (LLP) RC4112 (E) Rev. 18 publication (here after referred to as the Guide). The CRA answers questions about participating in the LLP and repaying your withdrawals, including how to apply for the LLP; how much, how often and when you can withdraw and filing an Income Tax and Benefit Return and implications for LLP participants who live outside of Canada, i.e., become a non-resident of Canada and other special circumstances.
Under the LLP, you can withdraw up to $10,000 from your RRSPs in a calendar year. This is your annual LLP limit. You cannot withdraw more than $20,000 each time you participate in the LLP. This is your total LLP limit. You can participate in the LLP again, starting the year after you bring your LLP balance to zero.
If you withdraw more than the annual LLP limit of $10,000, the excess will be included in your income for the year of the withdrawal. The excess does not reduce your total LLP limit of $20,000.
If you withdraw more than the total LLP limit of $20,000, the excess will be included in your income for the year you exceed the total LLP limit.
Over a period of 10 years, you have to repay to your RRSP or PRPP (Pooled Registered Participant Plan) or both the amounts you withdrew under the LLP. Generally, for each year of your repayment period, you have to repay 1/10 of the total amount you withdrew, until the LLP balance is zero.
You will receive an LLP Statement of Account each year from the CRA with your notice of assessment or notice of reassessment. This statement will show the LLP withdrawals, your LLP balance, the amounts you have repaid to date, cancellations, income inclusions, and the amount you have to repay the following year. To view your LLP Statement of Account online, go to
My Account at canada.ca/my-cra-account.
The CRA Guide has a chart showing when to start repaying your LLP withdrawals. It answers questions for those who want to repay earlier, repay less than the amount required or repay more than the amount required in a year.
With respect to your personal financial record keeping here are journal entries to record your LLP withdrawal based on receiving $10,000 in Canadian dollars the first year to your Canadian bank account and making the first minimum annual repayment amount in the year determined by the CRA based upon a number of factors, including your qualifying student status.
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.
Date: (DD/MM/YYYY) you constructively receive funds from LLP.
Debit: Cash -- $10,000
Credit: LLP withdrawal payable -- $10,000
Date: (DD/MM/YYYY) for the first repayment year
Debit: LLP withdrawal payable -- $1,000 (1/10 of $10,000)
Cash: $1,000 -- for first annual LLP repayment
Canadian RRSPs Held by U.S. Residents & Citizens
(1) File IRS Form 1040, Schedule B of Form 1040, Form 8891 (U.S. Information Return for Beneficiaries of Certain Canadian Registered Retirement Plans), and Form 8938 (Statement of Specified Foreign Financial Assets).
(2) File Bank Secrecy Act (BSA) FinCEN Report 114 commonly referred to as FBAR (Report of Foreign Bank and Financial Accounts) for the reportable year. The FBAR is not filed with a federal tax return. File electronically through FinCENs BSA E-Filing System. Financial Crimes Enforcement Network (FinCEN), is a bureau of the Department of the Treasury, separate from the IRS.
It would be wise to consult with a Certified Public Accountant / Chartered Accountant / International Tax Consultant to discuss Cross-Border Tax Issues.
Alan M.
05/07/19