Are RESP Withdrawals Taxable for Parents or Students?

Key Takeaways

• Your RESP contributions come back to you tax-free when withdrawn.
• The taxable part of a normal RESP withdrawal — called an EAP — is usually reported by the student, not the parent.
• Parents may only need to report RESP income in one main situation: an Accumulated Income Payment (AIP).
• RESP contributions were never tax-deductible, so they are not taxed again when you get them back.
• If your child is in school and making normal withdrawals, you likely have nothing to report on your own return.

Are RESP withdrawals taxable for parents?

Not usually. During the normal school years — when your child is enrolled in an eligible program and withdrawing RESP funds for their education costs — you do not report those withdrawals as income on your own tax return.

The reason comes down to how money inside an RESP is organized. Every RESP holds two different types of funds: the contributions you put in over the years, and the earnings that grew inside the plan (including government grants, bonds, and investment growth). When money comes out, these two types are treated very differently for tax purposes.

For a broader look at how RESP withdrawals work, see Withdrawing from Your RESP.

What part of an RESP withdrawal is not taxable to parents?

The money you contributed is yours. When it comes back to you as the subscriber (the person who opened and manages the RESP), it is not taxable income. You do not include it on your tax return.

Here is an important detail: RESP contributions are not tax-deductible when you put them in. That is different from an RRSP. Because you never received a tax deduction for your RESP contributions, the Canada Revenue Agency (CRA) does not tax them when they are returned to you. This is called a return of contributions, and it does not appear on your income tax return as taxable income.

What part of an RESP withdrawal is usually taxed to the student?

The other type of withdrawal is called an Educational Assistance Payment, or EAP. EAPs include:

• Canada Education Savings Grants (CESG)
• Canada Learning Bonds (CLB)
• Provincial education incentives
• Investment earnings that grew inside the plan

This is the taxable part of an RESP withdrawal — but it is taxable to the student, not the parent. Your RESP provider issues a T4A slip to the student beneficiary. Embark is the only RESP provider with a student portal where they can download their tax documents, including their T4A slip. The student reports the EAP amount as income on their own tax return. Because most students have relatively low income while in school, the overall tax bill is often small, perhaps even zero, depending on the student’s total income that year.

As the subscriber, you do not receive a T4A tax slip for normal EAP withdrawals, and you do not report them on your return.

To learn more about how EAPs work, visit What Role Do EAPs Play in RESPs?.

When parents may have to report RESP income

There is one situation where the tax picture changes for parents: the Accumulated Income Payment, or AIP.

An AIP is not a normal school withdrawal. It typically happens when an RESP is being shut down and the earnings inside the plan cannot be transferred to an eligible student. For example, this might happen if your child does not pursue post-secondary education, or if the plan is being closed.

In this case, the earnings in the plan may be paid directly to the subscriber (often the parent who opened the plan). That amount is taxable to the subscriber at their regular income tax rate, plus an additional 20% tax (or 12% in Quebec). This extra tax is designed to recover some of the tax-sheltered growth the plan earned over the years.

There is one way to reduce this tax hit: if you have available RRSP contribution room, you may be able to roll some or all of the AIP into your RRSP, up to a lifetime limit of $50,000. This can lower the taxable amount. If you are approaching this situation, speaking with a tax professional is a good idea.

See also: What Happens to an RESP If It’s Not Used? and Can I Withdraw Money from an RESP Early?.

What is the difference between an EAP and an AIP?

The table below shows the key differences between a normal Educational Assistance Payment and an Accumulated Income Payment — and who reports each one.

	EAP (Educational Assistance Payment)	AIP (Accumulated Income Payment)
Who receives it	The student beneficiary	The subscriber (usually the parent)
What it includes	Grants, bonds, and investment growth	Accumulated earnings only (not contributions)
Who reports it for tax	The student	The subscriber (parent)
When it typically happens	During school enrollment	When the plan is wound down unused
Extra tax?	No	Yes — plus 20% (or 12% in Quebec), unless RRSP rollover applies

Do parents get a T4A slip for RESP withdrawals?

For normal EAP withdrawals during school, the T4A slip goes to the student — not the parent. The student uses it to report the EAP amount on their own tax return.

For an AIP, your RESP provider would issue a T4A to the subscriber, because that is who receives the taxable income in that scenario.

If you received a T4A you were not expecting, check whether your RESP issued an AIP rather than a regular EAP. These are separate events with different tax rules.

For more detail on RESP tax slips, visit Are RESP Withdrawals Taxable in Canada?.

What parents should check before tax season

A few simple steps can help you feel confident before you file:

• Confirm what type of withdrawal happened. Was it a return of contributions, an EAP, or an AIP?
• Check whether the student received a T4A. If so, the student reports it — not you.
• Look for any AIP notice. If your RESP provider paid accumulated earnings directly to you, you will receive a T4A and will need to report it.
• Keep your RESP records together. Withdrawal statements and plan documents make it easier to track what came out and when.
• Talk to a tax professional if you are unsure — especially if the RESP was closed or if you received an unexpected tax slip.

If you have an Embark RESP, you can log in to your account to find your withdrawal statements and plan documents in one place, or speak with an education savings specialist for more information.

Learn more about timing your withdrawals: When Is the Best Time to Withdraw from Your RESP?.

Common mistakes parents make with RESP tax reporting

Even well-prepared families can get tripped up. Here are a few mistakes to avoid:

• Reporting the student’s EAP on the parent’s return. EAPs belong on the student’s tax return. The parent does not report them.
• Assuming every RESP withdrawal is taxable. Your contributions come back tax-free. Only the EAP portion carries tax, and only for the student.
• Forgetting that AIPs are different. An AIP is not a normal school withdrawal. The rules are different, and the extra tax can be significant.
• Confusing a return of contributions with taxable earnings. These are separate buckets inside the RESP and are not treated the same way for tax purposes.

Also helpful: How to File Taxes as a Student and RESP Withdrawal Rules: How to Access Education Savings.

Frequently asked questions

Are RESP withdrawals taxable for parents or students?

In most cases, neither parent reports taxable income from a normal RESP school withdrawal. The contribution portion comes back tax-free to the subscriber, and the EAP portion (which includes grants and earnings) is reported by the student. The parent may have to report income only if an Accumulated Income Payment (AIP) was made.

Do parents report RESP EAPs on their tax return?

No. EAPs are reported by the student beneficiary. The student receives a T4A slip and includes the EAP amount as income on their own return. For more information, see Can I Claim RESP on Taxes?.

Are RESP contribution withdrawals taxable?

No. Contributions are returned to the subscriber tax-free. Because they were never tax-deductible when contributed, they are not taxed when withdrawn.

When is an AIP taxable to the parent?

An AIP is taxable to the subscriber when RESP earnings are paid out because the plan is being wound down and the funds cannot be used for a qualifying student. The amount is taxed at the subscriber’s regular rate plus an additional 20% tax (or 12% in Quebec), unless eligible RRSP rollover rules reduce the taxable amount.

Do parents get a T4A for normal RESP withdrawals?

Not for normal EAP withdrawals. The T4A in that case goes to the student. A parent (subscriber) would receive a T4A only if an AIP was paid out to them directly.

Understanding your RESP doesn’t have to be complicated. At Embark, our goal is to make education savings clear — from your first contribution to your child’s final withdrawal.