RESP Contributions Deductible?

On March 6, 2008, Bill C-253 (a private members bill) was passed in the House of Commons in spite of opposition from the minority Conservative government. If this bill is passed by the Senate, it will allow a deduction for the lesser of RESP contributions in the year, not in excess of the taxpayer's contribution room and $5,000. The Bill would also make all amounts received from an RESP taxable if that amount has been deducted by the taxpayer. This bill, originally introduced in 2006 would apply to taxation years after 2005, based on the wording of the bill.

 

On the other side of the coin, when RESP contributions are removed from the plan, they will be taxable, presumably to the recipient (student).

 

The government has indicated that, if the bill is passed, they would move to diminish its cost. On March 11, they followed through on that promise. See the Notice of Ways and Means Introduced below.