Pre-transfer Repayment Policy: Questions & Answers
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The information contained on this page is technical in nature and is intended for Registered Education Savings Plan (RESP) and Canada Education Savings Program promoters. For general information, visit the RESP section.
Questions and answers
September 23, 2015
Pre-transfer Repayment Policy
The purpose of this Information Bulletin is to provide additional information to Registered Education Savings Plan (RESP) promoters regarding the Pre-transfer Repayment Policy.
- Q1. Whose responsibility is it to transfer grant/bond received in an RESP after a transfer has been completed?
- A1. It is the responsibility of the relinquishing promoter to determine if the pending grant can be transferred. If it is not part of an ineligible incentive, the relinquishing promoter must transfer it to the receiving promoter. If the pending grant received is part of an ineligible incentive that was repaid prior the transfer, the relinquishing promoter must repay the incentive to the government.
- Q2. Please clarify the impact of the pre-transfer repayment policy on the Additional Canada Education Savings Grant (CESG).
- A2.Once Additional CESG is paid into an RESP it becomes part of the CESG. There is no requirement to keep separate accounts for the additional CESG. Therefore, as per the A-B Transfer Policy, the full CESG (Basic + Additional CESG) must be repaid.
Inform the subscriber
- Q3. Whose responsibility is it to inform the subscriber of the repayment of an ineligible incentive? Is there a specific timeframe to wait for the subscribers consent? What type of confirmation or consent is required from the subscriber in order to repay the ineligible incentive?
- A3. Employment and Social Development Canada (ESDC) does not regulate these practices. It is up to each promoter to ensure good business practices.
- Q4. If a partial transfer is completed, can the repayment of the ineligible incentive be done in the same proportion as the transfer?
- A4. No, when completing a partial transfer the ineligible incentive must be repaid in full otherwise the transfer will not be proportional.
In keeping with the requirements of the Canada Education Savings Regulations, if a partial transfer is completed all of the notional accounts must be transferred in the same proportion as the value of the property transferred is to the total value of the property, other than the value of the property in the Canada Learning Bond (CLB) account, at the time of the transfer.
For example: If a subscriber requests a transfer of 50% of the RESP, and the total value of the RESP is $20,000, a total of $10,000 would need to be transferred. If the receiving promoter does not offer Saskatchewan Advantage Grant for Education Savings (SAGES), the transfer cannot be completed proportionately if the full balance of SAGES is not repaid.
|RESP Accounts||Total Amounts||Repayment||Amount transferred 50%||Remaining Balance in Relinquishing RESP|
|CESG (Basic + Additional)||$5,500||$0||$2,750||$2,750|
(At a rate of 50%)
|$0 (Not offered so cannot be transferred)||$1,000|
|Total RESP||$20,000||($1, 000)||$9,000||$10,000|
This shows that the amount transferred is disproportionate from the total balance remaining in the relinquishing RESP. The full amount of SAGES must be repaid and then the transfer can be done as follows:
|RESP Accounts||Total Amounts||Repayment||RESP amounts before transfer||Amount transferred 50%||Remaining Balance in Relinquishing RESP|
|CESG (Basic + Additional)||$5,500||$0||$5,500||$2,750||$2,750|
If you have any questions on this information bulletin, please contact us by e-mail at firstname.lastname@example.org or call at 1-888-276-3624. Our hours of operation are from 8 a.m. to 5 p.m. Eastern Standard Time.
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