RESP tax slips and reporting simplified

Plain-language summary

• RESP withdrawals are not all taxed the same way. The tax result depends on which bucket the money comes from.
• A refund of contributions is the subscriber's own after-tax money coming back. CRA says promoters do not issue a T4A for these payments, and they are not reported as income.
• An Educational Assistance Payment, or EAP, is the student-taxable part used for post-secondary education. It can include CESG, CLB, provincial incentives, and investment earnings.
• CRA says EAPs are reported to the student on a T4A in box 042 and the student includes the EAP as income for the year received.
• An accumulated income payment, or AIP, is generally leftover RESP earnings paid when the money is not being used through education withdrawals. AIPs are normally taxable to the recipient and can face an extra tax.
• CRA's tax-return lesson says AIPs are shown in box 040 on a T4A, while contribution refunds are not shown on a slip.

Action steps

1. Before requesting a withdrawal, ask the promoter to split the request into contribution refund, EAP, AIP, grant repayment, transfer, or other payment type.
2. If the student is in an eligible program, decide how much should be paid as an EAP versus how much should come from contributions.
3. Tell the student to watch for a T4A if they receive EAPs, because the EAP belongs on the student's tax return, not the subscriber's return.
4. If an AIP is being considered, pause and ask about tax withholding, the extra AIP tax, Form T1172, and whether a direct RRSP transfer with Form T1171 is available.
5. Keep the promoter's withdrawal confirmation, T4A slips, proof of enrolment, receipts, and a year-end note showing which part of the RESP was withdrawn.
6. If the wrong person receives the slip or the amount looks wrong, contact the promoter before filing or amending a tax return.

Caveats to watch

• A withdrawal being tax-free does not mean it is consequence-free. Contribution withdrawals can still interact with grant repayment, over-contribution correction, plan terms, or provider processing rules.
• A T4A does not prove the money was spent wisely; it reports the taxable RESP payment category. EAP reasonableness and enrolment proof are separate checks.
• The student may owe little or no tax on EAPs if their income is low, but the amount still has to be reported when a T4A is issued.
• AIPs are much more expensive than EAPs for many families because regular income tax can apply along with an extra 20% tax, or 12% for Quebec residents.
• CRA's T4A payer page uses a more-than-$50 reporting threshold for total EAPs to a beneficiary or AIPs to a subscriber in a calendar year. Families should still keep records even for small payments.
• Provider labels can vary. Some forms call contribution withdrawals PSE capital, refund of contributions, capital withdrawal, or subscriber contribution withdrawal.

Examples

Example: student receives an EAP

A student receives a $6,000 EAP after starting college. The payment includes RESP earnings and federal grant money. The promoter issues a T4A to the student with the EAP in box 042, and the student reports it on their tax return for that year.

Example: subscriber gets contributions back

A parent withdraws $4,000 of original RESP contributions while the student is enrolled. Because those contributions were made with after-tax money, the promoter does not report that contribution refund on a T4A. The family still checks whether the withdrawal affects grants or provider rules.

Example: leftover growth becomes an AIP

An RESP is no longer being used for school, and the subscriber asks for leftover investment earnings as an AIP. The amount can be shown in box 040 on a T4A to the recipient, and the recipient may also need to calculate the additional AIP tax unless a valid direct transfer path reduces the taxable amount.

Example: mixed withdrawal

A family requests $12,000 for first-year university. The promoter processes $7,000 as an EAP and $5,000 as a contribution withdrawal. Only the EAP portion is expected to appear on the student's T4A; the contribution portion is tracked separately in the provider's withdrawal confirmation.

Simple bucket map

• Contribution refund: original subscriber money, generally tax-free, no T4A, not reported as income.
• EAP: grants, bonds, provincial incentives, and investment growth paid to or for the student, generally T4A box 042 to the student.
• AIP: leftover accumulated earnings paid outside the normal education-withdrawal path, generally T4A box 040 to the recipient plus possible extra tax.
• Grant or bond repayment: unused government incentives may go back to the government instead of being paid to the family.

Questions to ask your promoter

• Which part of this withdrawal is contribution refund, EAP, AIP, transfer, or grant repayment?
• Who will receive the T4A, the student or the subscriber?
• Which T4A box will you use for each taxable payment?
• Will you withhold tax on an AIP, and do I need Form T1171 or T1172?
• Can you provide a written withdrawal breakdown before year-end so our tax records match the slips?

Tax-time checklist

• Student: look for T4A box 042 if any EAP was paid during the calendar year.
• Subscriber or AIP recipient: look for T4A box 040 if an AIP was paid.
• Subscriber: keep contribution-withdrawal confirmations even though contribution refunds are not income.
• Family: compare slips with provider confirmations and ask for corrections before filing if the category or recipient looks wrong.

Official sources