Lifelong Learning Plan: $10,000 a year, $20,000 max, 10 years to repay

What are the LLP limits and deadlines?

Your client can withdraw up to $10,000 in a calendar year and $20,000 in total for one participation period, and the money doesn't have to match tuition or education costs canada.ca. The two caps sit in paragraphs (c) and (d) of the "eligible amount" definition in subsection 146.02(1) of the Income Tax Act laws-lois.justice.gc.ca. Neither figure is indexed, so they're the same for 2026 as in earlier years.

Anything above $10,000 in one year is included in income for that year, the issuer withholds tax on it, and it doesn't count toward the $20,000. Anything above the $20,000 total is included in income for the year the total is exceeded canada.ca. The program test is three consecutive months and 10 hours a week of courses or work, and study time doesn't count toward the hours canada.ca.

Who can be the LLP student, and which RRSPs can pay out?

The student is your client or their spouse or common law partner, never a child of either of them. Your client must be a Canadian resident and the annuitant of the RRSP, and the student must be enrolled full time in a qualifying program at a designated educational institution canada.ca. Part time works only when the student can't reasonably attend full time because of an impairment (backed by a signed letter from a doctor, nurse practitioner, psychologist or similar) or is entitled to the disability amount on line 31600 for the withdrawal year.

Once a student is named, every later withdrawal in that period has to be for the same student. Spouses can each participate, for themselves or for each other, each with their own $10,000 and $20,000 limits. There's no lifetime cap on the number of participation periods: a new one can start the year after the LLP balance reaches zero. An unpaid Home Buyers' Plan balance doesn't block an LLP withdrawal canada.ca.

Locked in RRSPs can't be used, and PRPPs and SPPs can't pay out under the LLP, though contributions to them can be designated as repayments. Each withdrawal needs Form RC96, with Part 1 filled in by your client and Part 2 by the RRSP issuer, and the amount comes back on a T4RSP in box 25 canada.ca. The form's full title is the LLP Request to Withdraw Funds from an RRSP canada.ca.

When does the repayment period start?

The CRA checks whether the student was a qualifying student for at least three months in each year. If the student fails that test two years in a row, repayment usually starts in the second of those years. If the student passes every year, repayment starts in the fifth year after the first withdrawal canada.ca. The CRA's own example: Joseph withdrew in 2024, finished his program in 2025 and wasn't a qualifying student in 2026 or 2027, so his repayment period begins in 2027.

Worked example. Your client withdraws $10,000 in 2026 and $10,000 in 2027 for a program that ends in 2027, and doesn't study in 2028 or 2029. Repayment starts in 2029, so the required amount is $20,000 ÷ 10 = $2,000 a year from 2029 to 2038. Had the student kept qualifying every year, the latest start would have been 2031, the fifth year after 2026.

In 2029 the $500 shortfall goes on line 12900, and the balance drops by the $1,500 repaid plus the $500 included in income. Repaying extra in 2030 lowers every later year, because the CRA divides the remaining balance by the remaining years canada.ca. The repayment formula itself is subsection 146.02(4) laws-lois.justice.gc.ca.

How does a repayment get credited?

Your client contributes to any of their RRSPs, their PRPP, their SPP or a new RRSP, during the year or within the first 60 days of the next year, and designates the amount on Schedule 7 with that year's return. A repayment isn't an RRSP contribution, so it's never deductible, even when the RRSP deduction limit is zero or negative canada.ca. Contributions to a spouse's or common law partner's plan don't count, and neither do transfers from an RPP, DPSP, RRIF, FHSA, SPP or another RRSP or PRPP.

The CRA sends an LLP Statement of Account with each notice of assessment showing the amount due the following year, and bankruptcy doesn't remove the obligation canada.ca. From the year of the first withdrawal, your client has to file a return every year until the balance is repaid or included in income, even with no tax owing canada.ca. Contributions on top of the designated amount are ordinary RRSP contributions, deductible only within the 2026 RRSP limit.

What if the student drops out or never enrols?

If the student leaves before April of the year after the withdrawal and less than 75% of the tuition is refundable, your client can still repay over 10 years. If 75% or more is refundable, the withdrawal has to be cancelled, or it's included in income for the year it came out canada.ca. The same cancellation applies when a student who had an offer of enrolment doesn't enrol before March of the following year, or when your client becomes a non resident before the end of the withdrawal year canada.ca.

To cancel, your client repays the amount to their own RRSP and files Form RC97 or a letter. A resident has until December 31 of the year after the withdrawal, so the CRA's example of $10,000 taken out on July 16, 2025 has until December 31, 2026 canada.ca. The cancellation payment isn't deductible, can't go to a PRPP, SPP or spousal plan, and any unpaid part is added to income for the withdrawal year, with a reassessment if that year is already assessed.

What happens at death, emigration or age 71?

At death, the LLP balance is generally included in income on the final return under subsection 146.02(6). A surviving spouse or common law partner who is resident in Canada can jointly elect, under subsection 146.02(7), to take over the balance instead laws-lois.justice.gc.ca. The election goes on Form RC98 or a signed letter attached to the final return canada.ca.

A client who becomes a non resident after the withdrawal year must repay the balance or include it in income by the earlier of the filing date for the year they left and 60 days after they left. In the year your client turns 71, they can repay the whole balance, part of it, or nothing. Whatever is left is spread over the remaining years of the period and included in income each year, because contributions stop after 71 canada.ca. The CRA's example: a $7,200 balance with $3,000 repaid leaves $4,200, so $600 ($4,200 ÷ 7) is income each year from 2026 to 2032.

One more trap: contributions made in the 89 days before an LLP withdrawal can lose their deduction. The amount that can never be deducted is those contributions minus the RRSP's fair market value right after the withdrawal, but not below zero canada.ca. Keep new contributions out of the RRSP your client plans to draw on during those 89 days.