Pre-transfer Repayment Policy: Questions & Answers

Purpose

The purpose of this Information Bulletin is to provide additional information to Registered Education Savings Plan (RESP) promoters regarding the Pre-transfer Repayment Policy.

Promoter responsibility

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.

Additional CESG

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.

Partial transfer

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.