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Old 01-27-2016, 08:28 PM
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RESPs

RESPs are broken down as follows:

RESP opened by grandparent, aunts, uncles, friends, relatives of the student are eligible as the student’s portion of the expense.

RESP opened by parents DURING marriage are eligible for the parents’ portion of the expense or may be transferred to the student.

RESP opened by parents FOLLOWING DIVORCE are eligible for that parents’ portion of the expense. For instance, mom opens RESP six months after divorce is finalized. This money is used for her share of the child’s expenses.

Grant money within the RESP that is provided by the government is withdrawn according to the eligibility above. It is not automatically transferred to the student.

Net cost
The net cost of the expense is considered after all tax deductions have been applied. Tuition is an eligible expense under the Canada Revenue Agency.
Moving expenses are eligible expenses under the Canada Revenue Agency.

Tuition is calculated according to the tax reduction. For instance, if tuition costs are $7000 and the tax benefit awarded for it is $2000, the net cost of tuition calculated in the split is $5000.

How to calculate the costs
Calculate the sum of the following:
• Tuition—either via a lawyer calculation or by completing a “dummy” tax form for the recipient parent. (Full cost of tuition less provincial grant less tax benefit).
• Books
• Residence/living expense fees (for a child living away from home)
• Equipment
• Transportation
• Food
• Additional eligible expenses not listed but considered eligible

Total cost of education divided by 3

1/3 of the cost is attributed to the child and paid via employment income, bursaries, federal grants, gifts from others, RESP from family members other than parents.

2/3 of the cost split proportionate to parent’s income similar to S7.

Example:
Total cost of education expenses--$15,000
1/3 cost attributed to child--$5000
$10,000 to be split proportionate to income—father’s share = 65% $10,000 x .65 = $6500

Last edited by mcdreamy; 01-27-2016 at 08:38 PM.
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