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What are Educational Assistance Payments (EAPs)?
The Educational Assistance Payment (EAP) is the payment of the RESPs income and government grant (e.g. Canada Education Savings Grant and Quebec Education Savings Incentive) amount to a beneficiary to help finance the cost of post-secondary education.
The EAP amounts include a portion of accumulated income and government grants such as CESG and the QESI (Quebec beneficiaries only).
EAPs are taxed in the hands of the beneficiary. Since students typically have little other income, they pay little or no tax on the EAPs. The promoter (TD Direct Investing) reports EAPs in box 42 on a T4A slip and sends a copy to the student. The student includes the EAP as income on his/her return for the year the student receives them.
EAP amounts are calculated based on prescribed CRA formulas to determine the amount attributable to each portion and whether the RESP plan includes accumulated income.
Please note that the answers to the questions are for information purposes only for the products discussed. Individual circumstances may vary. In case of discrepancy, the documentation prevails.