Do RRSP affect OSAP grants

Answer 1

If you are referring to parents contributing to their own RRSP`s, I have a shocking answer for you: Osap calculates parents net income by deducting from gross income the CPP, UI and taxes paid. By contributing too RRSP, the parents reduce their tax payable. This results in higher income for OSAP purposes, and reduces your osap entitlement. It can also reduce the non-repayable grants associated with OSAP. Typically the claw-back could be 15-30% of the tax saving due to the RRSPcontribution...

For RRSP of the student:

a) Single dependent/independent and sole support students

Step 1: Assess 100% of the reported value of all RRSPs declared in Item 660 which are registered to the student. Do not include the value of RRSPs mandatorily "locked" in under the Canada Pension Plan Act. (See Definitions and Context)

Step 2: Deduct from the amount in Step 1 $2,000 for each 12 month period that the student has been out of secondary school (Item 175 of the OSAP application)

b) Married students and Students in Common law/Same-sex Relationships

(i) One spouse is a student

Step 1: Assess 100% of the reported value of all RRSPs declared in Item 660. Do not include the value of RRSPs mandatorily "locked" in under the Canada Pension Plan Act. (See Definitions and Context)

Step 2: Deduct from the amount in Step 1 $2,000 for each 12 month period the student has been out of secondary school (Item 175) and deduct $2,000 for each 12 month period the spouse has been out of secondary school (Item 945).

Multiply the result by 50% to get the assessed RRSP contribution: This is the amount that will be deducted from your financial need for OSAP calculations.

It seems that it would be wise to realy withdraw the money and use it, otherwise you loose part of OSAP every year, because you still have RRSP...