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According to the bank, unassisted contributions are those contributions you make but you do not get any grants. Assisted contribution are those contributions you make and will get the government grant. So, we have only received the CES grant for 50% of our contributions. We were never advised or informed of “assisted” vs “unassisted ...
- Disclaimer: RESP promoters
- On this page
- Alternate format
- List of acronyms
- Introduction
- 4.1. RESPs – An overview
- 4.2. Establishing the RESP
- 4.3. Contributions and their limits
- 4.4. Types of RESPs
The information contained on this page is technical in nature. It is intended for Registered Education Savings Plan (RESP) and Canada Education Savings Program promoters. For general information, visit the RESP section.
•Alternate format
•List of acronyms
•Introduction
•4.1. RESPs – An overview
•4.2. Establishing the RESP
•4.3. Contributions and their limits
A PDF version of the Registered Education Savings Plan provider user guide is available on the index page.
AIP Accumulated income payment
BCTESG British Columbia Training and Education Savings Grant
CESG Canada Education Savings Grant
CESP Canada Education Savings Program
CLB Canada Learning Bond
CRA Canada Revenue Agency
A Registered Education Savings Plan (RESP) is an education savings plan (ESP) that has been registered with the Canada Revenue Agency (CRA). It is a savings vehicle intended to encourage saving for post‑secondary education. More precisely, it is an arrangement between the RESP promoter and subscriber(s).
The subscriber can be anyone depending on the type of RESP opened. For more information, refer to section 4.4. Types of RESPs for an in‑depth explanation of all RESP plan types.
The subscriber may make contributions to a RESP. The RESP promoter agrees to use the accumulated funds to make educational assistance payments (EAPs). The promoter makes those EAPs to an eligible beneficiary designated by the subscriber. RESP earnings are not taxable until they are withdrawn to offset the costs of the beneficiary’s post‑secondary education.
An RESP must be opened to receive payments of education savings incentives in respect of eligible beneficiaries.
RESP promoters offer education savings plans (ESPs) designed to help their clients save for a child’s post‑secondary education (PSE).
An ESP contract can be registered if it meets certain terms and conditions stipulated in section 146.1 of the Income Tax Act (ITA). The ESP then becomes a RESP. Earnings in the RESP are not taxable until they are withdrawn.
Once an ESP has been registered, it is subject to rules that govern contributions, withdrawals, earnings, and the transfer of monies. Compliance with these rules ensures the registered status of the RESP.
The RESP contract will include terms and conditions that the subscriber must agree to, which vary depending on the type of plan. For example:
•the need for making contributions to the RESP over the term of the contract, or
•whether contributions will be intermittent or on a regular basis (at the discretion of the subscriber)
4.2.1. Opening the ESP
A subscriber enters into an ESP contract with an RESP promoter of their choice. The RESP promoter then arranges to have the plan registered with the CRA. Typically, the subscriber is the child’s parent or parents. It can also be a beneficiary, a grandparent, another family member, or someone not related to the beneficiary. One person can open the ESP or they can open it jointly with their spouses or common‑law partners. Child care agencies can also open ESP. There are 3 different types of ESPs: family plans individual (non‑family) plans group plans The subscriber(s) must choose the RESP promoter that they would like to deal with and decide what type of plan that they will open. For more information, refer to section 4.4. Types of RESPs, later in this chapter.
4.2.2. Registering the ESP
An ESP contract must meet certain conditions in order for it to be registered with the CRA. An RESP promoter must submit certain information to ESDC when applying for the registration of an ESP on behalf of the subscriber, as follows: an RESP promoter’s application form must: be filled out with accurate and valid information be done according to procedures established by the CRA, and then submitted to the RESP promoter’s head office for processing the application form must also include a notice to the subscriber(s) that an over‑contribution to the plan may result in a penalty tax Any new contract submitted to the Canada Education Savings Program (CESP) system will be treated as a request to register the plan with the CRA. The CRA will register only those contracts that meet all registration requirements.
4.2.3. Social Insurance Numbers (SINs)
The SIN is a 9 digit number used in the administration of various Canadian government programs. The Social Insurance Registry (SIR), ESDC, administers the SIN Program. When opening an ESP, a SIN is required for: the ESP subscriber(s), and the ESP beneficiary(s) When requesting the Additional CESG, a SIN is required for: the beneficiary’s individual primary caregiver (PCG), or the individual PCG’s cohabiting spouse or common‑law partner When requesting the CLB: if the beneficiary is under 18 years of age (CESP application form ESDC SDE 0093): a SIN is required for the beneficiary’s individual primary caregiver, or that of the individual PCG’s cohabitating spouse of common‑law partner if the beneficiary is between 18 and 20 years of age (CESP application form ESDC SDE 0107): no SIN other than the one(s) needed to open the RESP need to be collected The SINs are used to: request the CESG and the CLB ensure that accurate RESP records are maintained for each beneficiary track contributions to RESP(s) for each beneficiary verify each beneficiary’s eligibility for education savings incentives administered by ESDC track incentive payments administered by ESDC to RESP(s) in respect of each beneficiary track repayment of incentives administered by ESDC (for example, when making a withdrawal from a RESP) track EAPs made in respect of each beneficiary, and ensure that tax slips are issued to the right person and correctly A family member or friend can open an RESP and name a child as the RESP beneficiary. To do so, they will need to obtain the SIN of the child from the child’s custodial parent or legal guardian. The child’s custodial parent(s) or legal guardians can apply for a SIN for their child. There are no fees associated with a SIN application. Visit the Service Canada Web site for the SIN application form and related information. To obtain a SIN, someone can apply in person at a Service Canada office or by mail. After successfully processing a request, Service Canada provides the new SIN information in a confirmation letter. Service Canada no longer issues SIN cards. 4.2.3.1. Verifying the beneficiary’s SIN The SIN is a key piece of information that the CESP system uses to verify a beneficiary’s eligibility for the applicable education savings incentive(s). When an RESP is entered into, the RESP promoter submits the beneficiary’s SIN information electronically to the CESP system. Then, in partnership with the SIR, it validates the beneficiary’s information. If the beneficiary information submitted by the RESP promoter does not match the information contained in the SIR, the submission will result in an error. This will lead to the CESP system rejecting the information. The CESP system will send a report to the RESP promoter, identifying the field(s) in error. The RESP promoter will have to verify the information provided by the subscriber and resubmit the data to the CESP system. Until the beneficiary information is successfully processed by the CESP system, any financial information submitted will cause errors. This includes requests for payments of the CESG, the CLB, the SAGES and the BCTESG. The beneficiary information must be successfully processed and established before any financial transactions related to that beneficiary can be processed. For more information, refer to Chapter 3. The Canada Education Savings Program system and Interface Transaction Standards.
Contributions are deposits made to an RESP by a subscriber in respect of a beneficiary and remain the property of the subscriber. While the subscriber cannot deduct contributions made to an RESP from their taxable income, earnings on contributions are tax sheltered.
There is no limit to the number of RESPs that can be opened in respect of a beneficiary. However, the following are the limits on the amount that can be contributed across all existing RESPs for one beneficiary.
A beneficiary’s contribution limit is based on the total of all contributions, by all subscribers into all RESPs. The annual and lifetime limits cannot be circumvented by entering into multiple plans.
Over‑contributions to an RESP are subject to a penalty tax. For more information, refer to section 4.5. Over‑contributions.
4.4.1. Individual (non‑family) plans
The features of an individual (non‑family) plan are as follows: there is a single subscriber (includes child care agencies) or joint subscribers that have a spousal or common‑law relationship there is only one beneficiary at any given time the beneficiary does not need to be related to the subscriber there is no restriction on the age of the beneficiary – it can be a child or an adult there is no restriction on who can be named as the beneficiary. A subscriber could be the beneficiary of their own plan The subscriber is responsible for presenting the beneficiary’s information to the RESP promoter. 4.4.1.1. Naming a replacement beneficiary in an individual plan A subscriber can replace an existing beneficiary with a new beneficiary if their contract allows for it. When this happens, the original beneficiary’s contribution history could be attributed to the replacement. This could affect the annual and lifetime contribution limits for the new beneficiary. Furthermore, this could result in a penalty tax for all subscribers of that beneficiary. There will not be any tax consequences to the replacement beneficiary if one of the following conditions is met: the replacement beneficiary is under 21 and is a sibling of the original beneficiary, or both the original and replacement beneficiaries are under 21 and are related by blood or adoption to the original subscriber of the RESP The subscriber will need to present the RESP promoter with all of the necessary information relating to the replacement beneficiary. The RESP promoter must then submit that information to the CESP system. For more information, refer to section 4.3. Contributions and their limits and section 4.5. Over‑contributions. 4.4.1.2. Making contributions to an individual plan A subscriber can make contributions to an individual (non‑family) plan as long as contribution limits for the beneficiary have not been exceeded. However, any transfer of monies from one RESP to another could affect the contribution limits. For more information on transfers, refer to section 4.7. Transfers between RESPs and Chapter 9. Registered Education Savings Plan transfers and the education savings incentives. Contributions to an individual (non‑family) plan must stop at either: 31 years after the end of the year the RESP was opened (35 years in the case of a specified plan), or 31 years after the end of the year of the “earliest effective date that applies” if a transfer has taken place Earliest effective date when a transfer has taken place, when a transfer is made between RESPs, the earliest effective date of the 2 plans must be used to determine the date when plan contributions must stop in the receiving plan. For more information, refer to Chapter 9. Registered Education Savings Plan transfers and the education savings incentives.
4.4.2. Family plans
The features of a family plan are as follows: there is a single subscriber or joint subscribers that have a spousal or common‑law relationship there can be one or more beneficiaries at any given time the beneficiaries must be related to the original subscriber of the RESP, either by blood or by adoption an individual can become a beneficiary of a family RESP only if: that individual has not yet turned 21, or if the individual was, just before joining the family RESP, a beneficiary under another family RESP contributions must be made in the name of a specific beneficiary annual and lifetime RESP contribution limits apply to each beneficiary. Contributions made to any RESP in respect of a beneficiary count toward that beneficiary’s annual and lifetime contribution limits Family member – relationship, each beneficiary of a family plan must be related by blood or adoption to each living subscriber under the plan or be related to a deceased original subscriber. Under the ITA, a “blood relationship” is that of a parent and child (or grandchild or great grandchild) or that of a brother or sister. The subscriber’s niece, nephew, aunt, uncle and cousin do not meet the definition of “blood relative”. They, therefore, do not qualify as a beneficiary under a family plan. An individual is not considered to be a “blood relative” of himself/herself. An adopted child is related by adoption to his parents and grandparents. Stepchildren are related to their stepparents by virtue of being the children of their parent’s spouse or common‑law partner. This is referred to as “adoption in fact”. Only plans where all beneficiaries are siblings can receive payments of the following incentives: Additional CESG CLB SAGES BCTESG For more information, refer to the applicable incentive chapters in: Chapter 5. The Canada Education Savings Grant Chapter 6. The Canada Learning Bond Chapter 7. British Columbia Training and Education Savings Grant Chapter 8. Saskatchewan Advantage Grant for Education Savings 4.4.2.1. Adding a beneficiary to a family plan If the terms of a subscriber’s contract allow for it, the subscriber can add beneficiaries to their plan at any time. However, the additional beneficiaries must still be related to the original subscriber of the RESP, either by blood or by adoption. Furthermore, any additional beneficiaries must be siblings of the existing beneficiaries if the following incentives have been paid into the RESP: the Additional CESG the CLB, or the BCTESG If not, the promoter will need to repay all amounts of: the Basic CESG the Additional CESG the CLB, and the BCTESG The SAGES can only be paid into a sibling‑only plan. However, the subscriber can add a cousin to the plan without having to repay the SAGES already in the RESP. The eligibility criteria for adding a new beneficiary are as follows: additional beneficiaries must be related to the original subscriber of the RESP, either by blood or adoption and must be: under 21 at the time they are added, or must have been beneficiaries under another family RESP immediately before being added the subscriber must give the additional beneficiary’s SIN to the RESP promoter 4.4.2.2. Naming a replacement beneficiary in a family plan A subscriber can replace an existing beneficiary with a new beneficiary if their contract allows for it. When this happens, the original beneficiary’s contribution history could be attributed to the replacement. This could affect the annual and lifetime contribution limits for the new beneficiary. Furthermore, it could result in a penalty tax for all subscribers of that beneficiary. There will not be any tax consequences to the replacement beneficiary if one of the following conditions is met: the replacement beneficiary is under 21 years of age and is a sibling of the original beneficiary, or the original and replacement beneficiaries are under 21 years of age. They also need to be related by blood or adoption to an original subscriber of the RESP Note: The replacement beneficiary must comply with the sibling‑only requirement associated with the Additional CESG, the CLB and the BCTESG. Otherwise, these education savings incentives must be repaid. SAGES can only be paid into a sibling‑only plan. However, a subscriber can add a cousin to the plan without having to repay the SAGES already in the RESP. For more information, refer to: Chapter 5. The Canada Education Savings Grant Chapter 6. The Canada Learning Bond Chapter 7. British Columbia Training and Education Savings Grant Chapter 8. Saskatchewan Advantage Grant for Education Savings The subscriber will need to present the RESP promoter with any necessary information relating to the replacement beneficiary. The RESP promoter must then submit that information to the CESP system. For more information, refer to section 4.5. Over-contributions. 4.4.2.3. Making contributions to a family plan A subscriber can make contributions to a family plan in respect of a beneficiary. They can do so as long as that beneficiary is under 31 and the beneficiary has not exceeded their contribution limit. In addition, any transfer of monies from one RESP to another can affect the beneficiary’s contribution limit. For more information on transfers, refer to section 4.6. Transfers between RESPs and Chapter 9. Registered Education Savings Plan transfers and the education savings incentives. Contributions for an individual beneficiary must stop at the earliest of 3 applicable dates: the date that the beneficiary turns 31, or 31 years after the end of the year the RESP was opened, or 31 years after the end of the year of the “earliest effective date that applies”, if a transfer has taken place (refer to the section 4.4.1.2. Making contributions to an individual plan – earliest effective date when a transfer has taken place) Contributions to a family plan with 2 or more beneficiaries must be made in respect of a specific beneficiary in the plan.
4.4.3. Group plans
The features of a group plan are as follows: each group plan is a collection of individual (non‑family) RESPs group plans are generally referred to as “Scholarship Plan Dealers” each group plan is a group trust the administration of group plans is based on an age cohort concept. This means that they administer the RESP contracts for beneficiaries of the same age together RESP contributions and education savings incentives are tracked per individual beneficiary but are pooled for investment purposes. Pooling is based on all beneficiaries having the same year of eligibility (example: they are in the same age cohort and are expected to attend post‑secondary education in the same years. This is usually set to be 3 or 4 years) payments for post‑secondary education assistance are determined by the number of beneficiaries who are eligible to receive such payments in the year of eligibility earnings associated with the CESG, the CLB, the SAGES and the BCTESG can only be shared among the beneficiaries of a particular RESP. As group plans are a collection of individual (non‑family) plans, these earnings cannot be shared among a group cohort 4.4.3.1. Making contributions in a group plan The subscriber must enter into a contractual arrangement with the RESP promoter, specifying a particular savings program. The contract will include the frequency of contributions to be made, the amount of the contributions, and investment options. The subscriber will then make deposits with the RESP promoter for the duration of the contract. The RESP promoter will credit the contributions to a deposit account in the subscriber’s name within the group trust. It will then credit any education savings incentives received by the beneficiary to a separate deposit account in the child’s name. That is also done within the group trust. Income earned on contributions can be shared within the group plan. Income earned on education savings incentives cannot be shared.
Mar 28, 2024 · Reviewed By: Jessica Barrett. Mar 28, 2024. A non-registered savings plan is a type of investment account that allows a person to save as much money as they want, without the limitations or tax benefits of registered savings plans. Registered savings plans are registered with the government. Some types of registered plans offer income-tax ...
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