Notice #671 - Specimen plan obligations
- May 11, 2016
- Specimen plan obligations
The purpose of this information bulletin is to remind Registered Education Savings Plan (RESP) promoters of the various requirements of the Canada Education Savings Act (CESA) and the Canada Education Savings Regulations (CESR) when developing or updating your RESP specimen plans.
The Canada Revenue Agency (CRA) has the authority to approve a promoter’s specimen plan in accordance with the conditions of section 146.1 of the Income Tax Act (ITA). The CRA’s review seeks to ensure that specimen plan documents comply with the registration requirements for education savings plans (ESP) and provisions under the ITA. The promoter may enter into an ESP contract with a subscriber only after receiving CRA’s approval of the specimen plan.
Employment and Social Development Canada (ESDC) would like to remind promoters that when developing or updating a specimen plan they are responsible for ensuring compliance with the CESA, the CESR, the legislation and regulations governing the designated provincial programs as well as the ESDC agreements with the promoters and trustees.
Below is a list of RESP specimen plans topics that frequently require clarification and/or correction:
- Using the correct names and abbreviations of the incentives and the department
- Indicating that even if the Canada Learning Bond (CLB) is repaid, it may be restored (there is no loss of entitlement)
- Clarifying consequences of contribution withdrawals: beneficiary must be eligible for an educational assistance payment (EAP) each time the subscriber withdraws contributions
- Indicating that fees cannot be charged against the balance of the incentive account
- Clarifying the definition of grant room vs. grant contribution room
- Clarifying the definition of Primary Caregiver (PCG) – promoters often provide a definition of the public PCG but not the individual PCG
- Indicating there may be other grant repayment reasons as the lists provided are often incomplete
- Providing a clear explanation of the 16-17 year rule
- Providing the correct Canada Education Savings Grant (CESG) repayment formula
- Explaining the sibling-only rule (for transfers and change of beneficiary)
- Explaining the sharing of earnings on the income earned on incentives
- Correcting unclaimed accounts information. The promoter must repay the government incentives if a payment is unclaimed
If you have any questions regarding 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 Time (EST).
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