e-3322 (Taxation)

Petition to the House of Commons

• A Registered Education Savings Plans (R.E.S.P.) is a saving plan set up to help parents pay for their child’s post-secondary education;
• There are two components to an R.E.S.P. The EAP is made up of the investment earnings and the government grant money which is taxable and included in the students’ income. The parent’s contribution is tax free;
• The government and financial institutions mislead parents by downplaying the fact that the money the student withdrawals is considered an income and therefore taxed.
• Financial institutions use catchy words and phrases such as “tax free”, “tax sheltered plans”, “hefty government grants” and “in most cases, the student’s income level and eligible tax credits will mean that little, if any income tax will be payable”;
• The government wrongly suggest that “money paid out if the R.E.S.P. as an EAP is taxed in the hands of the student. Since many students have little or no income, they can usually withdraw the money tax free”;
• Students work hard all summer long and many keep jobs during the school year as well.
• The R.E.S.P. should be taxed, but not count towards net income. The government and financial institutions should not be suggesting that students don’t have to pay any taxes since they don’t work enough; and
• Students who work are penalized by the R.E.S.P. when tax season arrives.