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The accumulated grants will be added onto the principle and interest in the RESP account, and paid out as part of the beneficiaries educational assistance payments during their post-secondary studies.
The law allowing an annual exclusion of up to $5,250 for educational assistance payments made to employees expired for tax years beginning after December 31, 1994.
Many employers and employees began treating educational assistance payments as taxable compensation for Federal income, social security and Medicare tax purposes after June 30, 1992 when the annual exclusion under Sec.