When it comes to withdrawing funds, your Registered Education Savings Plan (RESP) is different from any other registered plan. It’s all because an RESP is composed of two pools of mutual funds – one pool is taxable, and the other is non-taxable.

Your original contributions make up the non-taxable pool. This pool is your money. You can withdraw funds from this pool at any time, in any amount and for any purpose.

The taxable pool consists of Canada Education Savings Grant (CESG) funds, any provincial grant funds and plan earnings. Withdrawals from this pool are called Educational Assistance Payments (EAPs), and the amounts are taxable to your child as income while they’re a student.

You choose the pool, or pools, for each mutual fund withdrawal.

Withdrawals of contributions
You can withdraw your original contribution amounts tax-free at any time, without limits on withdrawal amounts.

Educational Assistance Payments (EAPs)
Withdrawals from a pool of grant funds and plan earnings are taxable to the student.

Withdrawal strategies

Over the years of your child’s post-secondary education, you have two goals when withdrawing funds from your RESP. First, you want to minimize or potentially avoid having your child pay tax on withdrawals. Second, you want to completely use up the taxable pool that includes grant money and plan earnings. Should funds remain in the taxable pool after your child graduates, you must repay the remaining grant money to the government if you close the plan.

When annual income is low. Your child can have an annual income up to the basic personal amount ($16,129 for 2025) plus the amount of their tuition tax credit without owing tax. In years when your child’s income is lower, you have the opportunity to make larger withdrawals of EAPs and remain under the taxable threshold. Some students never have to pay tax on RESP withdrawals.

When annual income is higher. Your child could have a year when they owe tax on earned income if they have a well-paying spring and summer job, a paid internship or a co-op work term. By taking withdrawals of contributions, they won’t also have to pay tax on their RESP withdrawals. However, keep in mind that you want to eventually take enough EAPs to use up the taxable pool of funds.

When education costs are lower. In some cases, education costs end up being lower than you expected. Maybe you budgeted for your child moving away for school, but they chose a local university and live at home. Or you saved for four years of a university program, and your child enrols in a two-year college program. In this case, your primary goal is not saving tax on withdrawals – it’s to deplete the pool of grant money and plan earnings. Paying tax on withdrawals at your child’s tax rate is better than possibly forfeiting the grant money.