Notice #820 – Educational Assistance Payment (EAP) Formulae for the SAGES and the BCTESG

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Information bulletin

Number:
CESP/PCEE-2019/20-001-820

Date:
June 13, 2019

Subject:
Educational Assistance Payment (EAP) Formulae for the Saskatchewan Advantage Grant for Education Savings (SAGES) and the British Columbia Training and Education Savings Grant (BCTESG)

Purpose

The purpose of this information bulletin is to inform promoters and trustees of the upcoming revisions to the EAP formulae for the Saskatchewan Advantage Grant for Education Savings (SAGES) and the British Columbia Training and Education Savings Grant (BCTESG).

Background

The Regulations Amending the Canada Education Savings Regulations have been made and were published in the Canada Gazette, Part II on December 26, 2018.

As a result of these regulatory changes, the federal, SAGES and BCTESG EAP formulae became misaligned. Therefore, the promoter and trustee agreements will be amended to re-align the formulae. These amendments will come into force on September 1, 2019.

SAGES EAP formula

A × G/C

where:

A is the amount of the EAP,

G is the balance in the SAGES account of the RESP immediately before the EAP is made, and

C is the total amount available to the beneficiary for an EAP, as defined in subsection 10 (2.2) of the Canada Education Savings Regulations.

BCTESP EAP formula

A × F/C

where:

A is the amount of the EAP,

F is the balance in the BCTESG account of the RESP immediately before the EAP is made, and

C is the total amount available to the beneficiary for an EAP, as defined in subsection 10 (2.2) of the Canada Education Savings Regulations.

SAGEP and BCTESG Examples

Example 1

A subscriber requests an EAP of $2,900 for the beneficiary. For the purposes of this example, the CESG limit has not been exceeded and the beneficiary has the SAGES, Canada Education Savings Grant (CESG) and Canada Learning Bond (CLB).

RESP Account balances:

Accumulated income SAGES CLB CESG
(grant account)
Contributions Fair Market Value
$4,000 $800 $1,200 $1,500 $15,000 $22,500

EAP amount available to the beneficiary:

Accumulated income + eligible provincial grants + beneficiary's CLB + CESG (if less than $7,200 already paid)

= $4,000 + $800 + $1,200 + $1,500

= $7,500

CLB portion of the EAP = A x B/C

where:

A is the amount of the EAP requested,

B is the balance in the beneficiary's CLB account immediately before the payment of the EAP, and

C is the total amount available to the beneficiary for an EAP, as defined in subsection 10 (2.2) of the Canada Education Savings Regulations

= $2,900 x $1,200/$7,500

= $464

CESG portion of the EAP = the lesser of (A) and (B)

(A) A × D/C

where:

A is the amount of the EAP requested,

D is the balance in the grant account of the RESP immediately before the payment of the EAP, and

C is the total amount available to the beneficiary for an EAP, as defined in subsection 10 (2.2) of the Canada Education Savings Regulations

= $2,900 x $1,500/$7,500

= $580

(B) The amount by which $7,200 is greater than the aggregate of all amounts determined under this subsection in respect of an EAP previously made by the promoter to the beneficiary.

= $7,200 - $0

= $7,200

The lesser of (A) and (B) = $580

Accumulated income portion of the EAP = A × E/C

where:

A is the amount of the EAP requested,

E is the amount of the accumulated income in the RESP immediately before the payment of the EAP, and

C is the total amount available to the beneficiary for an EAP, as defined in subsection 10 (2.2) of the Canada Education Savings Regulations

= $2,900 x $4,000/$7,500

= $1,546.67

SAGES portion of the EAP = A x G/C

where:

A is the amount of the EAP,

G is the balance in the SAGES account of the RESP immediately before the EAP is made, and

C is the total amount available to the beneficiary for an EAP, as defined in subsection 10 (2.2) of the Canada Education Savings Regulations

= $2,900 x $800 / $7,500

= $309.33

Verifying the results

EAP $2,900 = CLB + CESG + Accumulated Income + SAGES

EAP $2,900 = $464.00 + $580.00 + $1,546.67 + $309.33

EAP $2,900 = $2,900

Example 2

A subscriber requests an EAP of $1,300 for the beneficiary. For the purposes of this example, the CESG limit has not been exceeded and the beneficiary has the BCTESG, and CESG.

RESP Account balances:

Accumulated income BCTESG CESG
(grant account)
Contributions Fair Market Value
$2,000 $600 $1,600 $8,000 $12,200

EAP amount available to the beneficiary:

Accumulated income + eligible provincial grants + beneficiary's CLB + CESG (if less than $7,200 already paid)

= $2,000 + $600 + $0 + $1,600

= $4,200

CESG portion of the EAP = the lesser of (A) and (B) A × D/C

(A) A × D/C

where:

A is the amount of the EAP requested,

D is the balance in the grant account of the RESP immediately before the payment of the EAP, and

C is the total amount available to the beneficiary for an EAP, as defined in subsection 10 (2.2) of the Canada Education Savings Regulations

= $1,300 x $1,600/$4,200

= $495.24

(B) The amount by which $7,200 is greater than the aggregate of all amounts determined under this subsection in respect of an EAP previously made by the promoter to the beneficiary.

= $7,200 - $0

= $7,200

The lesser of (A) and (B) = $495.24

Accumulated income portion of the EAP = A × E/C

where:

A is the amount of the EAP requested,

E is the amount of the accumulated income in the RESP immediately before the payment of the EAP, and

C is the total amount available to the beneficiary for an EAP, as defined in subsection 10 (2.2) of the Canada Education Savings Regulations

= $1,300 x $2,000/$4,200

= $619.05

BCTESG portion of the EAP = A × F⁄C

where:

A is the amount of the EAP,

F is the balance in the BCTESG account of the RESP immediately before the EAP is made, and

C is the total amount available to the beneficiary for an EAP, as defined in subsection 10 (2.2) of the Canada Education Savings Regulations

=$1,300 x $600/$4,200

=$185.71

Verifying the results

EAP $1,300 = CESG + Accumulated Income + BCTESG

EAP $1,300 = $495.24 + $619.05 + $185.71

EAP $1,300 = $1,300

Contact us

If you have any questions regarding this information bulletin, please contact us by e-mail at cesp-pcee@hrsdc-rhdcc.gc.ca or call at 1-888-276-3624. Our hours of operation are from 8:00 to 17:00 Eastern Time.

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