Appendix G. RESP provider user guide – Understanding repayments

Alternate format

A PDF version of the Registered Education Savings Plan provider user guide is available on the index page.

Introduction

The Canada Education Savings Program (CESP) is a section within Employment and Social Development Canada (ESDC). The CESP is responsible for administering the following education savings incentives in Registered Education Savings Plans (RESPs):

• Basic Canada Education Savings Grant (Basic CESG)
• Additional Canada Education Savings Grant (Additional CESG)
• Canada Learning Bond (CLB)
• Saskatchewan Advantage Grant for Education Savings (SAGES)
• British Columbia Training and Education Savings Grant (BCTESG)

For more information, refer to Appendix C for a list of acronyms and terms used in this guide.

G.1. Overview

This appendix provides repayment guidelines and explains how RESP promoters must report repayment transactions to the CESP system for the incentives administered by ESDC.

G.1.1. What is a repayment

Certain circumstances require a repayment of education savings incentives from an RESP to the Government of Canada or designated provincial programs. The Canada Education Savings Regulations, provincial regulations and CESP operational policies specifies these circumstances.

G.1.2. What is the repayment process

RESP promoters are responsible for the following:

1. recognizing and identifying circumstances that require incentive repayments
2. determining incentive amounts to repay, and
3. reporting transactions to the CESP system which indicate the amounts of incentives to repay and the repayment reasons

Each month, the CESP system calculates the combined repayment amounts reported for each promoter. The CESP system will subtract those repayments from the total amount of incentives that would be payable to each promoter at the end of the month.

G.1.3. What is a repayment transaction

To report repayment transactions, RESP promoters must submit repayment records "400‑21" to the CESP system. These records have a record type (RT) of 400 and a transaction type of 21.

Promoters report repayment records using the key fields defined in the following table.

For additional technical information, refer to the CESP Interface Transaction Standards (ITS) on the Canada.ca/RESPresources Web page under the Systems Documentation tab.

G.1.4. Reporting multiple incentive repayments in a single record

Promoters can submit a separate record to the CESP system for each incentive they repay from an RESP.

Promoters may also repay multiple incentives in the same record if these incentives are:

• from the same RESP, and
• for the same repayment reason

The CLB repayment records must include the Social Insurance Number (SIN) of the beneficiary. Promoters must submit separate CLB repayment records for each individual beneficiary in family RESPs.

G.1.5. Impact of repayments on future incentive payments

G.1.5.1. CESG grant room

A beneficiary can receive a maximum of accumulated amount of $7,200 in CESG. This lifetime limit includes payments from both the Basic and the Additional CESG amounts made to all RESPs for a particular beneficiary.

The CESP system pays the CESG and deducts amounts from the available CESG balance of the beneficiary.

If the beneficiary repays the CESG, the CESP system will not restore the CESG amounts to the CESG grant room of individual beneficiaries. This is because repayments are at the plan level.

G.1.5.2. SAGES grant room

A beneficiary can receive a maximum of accumulated amount of $4,500 in SAGES. This lifetime limit includes payments made to all RESPs for a particular beneficiary.

The CESP system pays the SAGES and deducts amounts from the available SAGES balance of the beneficiary.

If the beneficiary repays the SAGES, the CESP system will not restore the SAGES amounts to the SAGES grant room of individual beneficiaries. This is because repayments are at the plan level.

G.1.5.3. BCTESG entitlement

A beneficiary can receive a single BCTESG payment of $1,200. Once an eligible beneficiary receives the BCTESG, the CESP system will refuse to pay subsequent BCTESG requests for that beneficiary.

The BCTESG repayments are at the plan level. The CESP system does not restore the BCTESG entitlement to beneficiaries named in the RESP.

Therefore, once the promoter repaid the BCTESG, subscribers cannot request repaid BCTESG amounts again for that beneficiary.

G.1.5.4. CLB entitlement

A beneficiary can receive up to $2,000 of CLB.

The CLB repayments are at the beneficiary level and do not affect a beneficiary's lifetime entitlement for the CLB.

If the promoter repaid a CLB amount, the CESP system can restore the beneficiary's CLB entitlement. The subscriber could request the CLB again for the same beneficiary.

G.1.6. Reversing and cancelling transactions

This section explains the purpose of reversing or cancelling transactions and compares the associated consequences with submitting repayment transactions to the CESP system.

G.1.6.1. When should promoters reverse or cancel transactions

There could be a situation when promoters submit transactions with inaccurate information and the CESP system processes these transactions successfully. When that occurs, the promoter must either reverse or cancel these transactions. Then, he must submit new transactions with accurate information as required.

Promoters should reverse or cancel transactions only to correct administrative errors. For example, the promoter could request incentives for the wrong beneficiary in a family RESP. In that case, they must reverse or cancel that request. Then, they must submit a new request to the CESP system for the correct beneficiary.

For more information, refer to G.1.6.5. What is an administrative error of this appendix.

Promoters must not reverse or cancel transactions solely to remove a penalty or to gain a greater benefit. For example, a subscriber may have instructed a promoter to make an RESP contribution that exceeded the lifetime $50,000 contribution limit for a beneficiary.

The promoter is responsible for reporting this contribution to the CESP system. He should not reverse the contribution transaction at a later date simply to avoid the corresponding tax penalties.

In general:

• the promoter must reverse federal incentive requests by submitting a RT 400 with the "reversal flag" field set to "2"; whereas
• requests for provincial incentives must be cancelled by submitting:
  • a 410‑31 transaction for the SAGES, or
  • a 411‑41 transaction for the BCTESG

G.1.6.2. The 3‑year rule for incentive requests

Promoters submit RESP transactions electronically to the CESP system for processing on a monthly basis. These transactions include requests for incentive payments.

Promoters must specify a transaction date for each incentive request. The following bulleted list specifies how promoters must determine the transaction date for each incentive:

• CESG: promoters must use the RESP contribution date
• CLB: promoters must use the CLB application form completion date
• SAGES: promoters must use the most recent of 2 dates:
  • the SAGES application form completion date, or
  • the RESP contribution date
• BCTESG: promoters must use the BCTESG application form completion date

Promoters have a certain amount of time to request incentives and attract a payment into an RESP. The transaction date of the incentive request must be less than 3 years before the date that the promoter sends the transaction to the CESP system. The CESP system could process an incentive request older than 3 years. However, the CESP system would refuse the payment for this request with a refusal reason "D" (late transaction).

Promoters must submit accurate and complete information to the CESP system regardless of the age of the original transaction.

It is possible for a promoter to correct an administrative error for a late incentive. If they receive a refusal reason "D", they can request an exemption to override the refusal reason. For more information, refer to G.1.6.5. What is an administrative error of this appendix.

The 3‑year rule is not a 3 year period during which subscribers can change their mind regarding an RESP transaction.

If the CESP system processes successfully an accurate transaction, promoters must not reverse it:

• solely to remove a penalty, or
• to gain a better benefit simply because the original transaction is less than 3 years old

For example, a promoter should not reverse an authentic contribution transaction simply because it did not attract a CESG payment.

G.1.6.3. Impact on future incentive payments

When a promoter successfully reverses or cancels an incentive request, the CESP system will restore the grant room or entitlement for the incentive. The CESP system will restore the amount to the amount it was prior to the processing of the original transaction.

For example, cancelling a request for the BCTESG would restore the BCTESG entitlements to the original amount. In the future, another BCTESG request for the same beneficiary could attract a new BCTESG payment to an RESP.

G.1.6.4. Comparing repayments with reversing or cancelling requests

It is important to understand the difference between:

• repaying an incentive, and
• reversing or cancelling an incentive request

The impact on RESP notional accounts may appear to be the same in some cases. However, there may be a difference in eligibility for future incentive payments.

Repaying an incentive: When a promoter repays any incentive (other than the CLB), the CESP system will not restore the entitlement to the beneficiary's plan. For additional information, refer to G.1.5. Impact of repayments on future incentive payments of this appendix.

Reversing or cancelling an incentive request: Reversing or cancelling an incentive request restores the beneficiary's entitlement for that incentive. It is as if the CESP system did not process the original incentive request.

In general, promoters should:

• use the guidelines in this appendix to determine when the promoter must repay incentives, and
• reverse or cancel incentive requests only to correct administrative errors

G.1.6.5. What is an administrative error

An administrative error occurs when a promoter does not follow a subscriber's instructions. In other words, the promoter will send a transaction to the CESP system that does not reflect the subscriber's request.

Let us illustrate this using this scenario. A subscriber instructs a promoter to withdraw $1,000 from a particular bank account. He then asks him to contribute the full amount into a specific RESP in respect of a particular beneficiary.

The following would be examples of administrative errors concerning the contribution transaction (400‑11):

• reporting an inaccurate amount (example: $100 instead of $1,000)
• reporting the wrong beneficiary (example: a sibling)

If a promoter identifies an administrative error, he must correct it. The promoter should keep all documentation that shows the discrepancy between the subscriber's instructions and the transaction submitted to the CESP system. He must do so since they may need to provide this documentation for the purpose of a compliance review.

To correct an administrative error, promoters may need to reverse previous inaccurate transactions and submit new transactions with accurate information.

There can be instances in which the promoter need to correct an administrative error that has an original transaction date of more than 3 years. Promoters must correct the information regardless of how old the original transaction is. In the case of an administrative error, the promoter can contact a CESP promoter support officer to request an exemption to override the 3‑year rule for that transaction. The CESP still reviews each exemption request on a case‑by‑case. As stated earlier, promoter has an obligation to correct inaccurate transaction sent to the CESP system. Therefore, the promoter should submit all transactions to correct the inaccuracy and once they receive the refusal reason "D", they can request an exception.

G.1.6.6. Reversing repayment transactions

The promoter can also reverse a repayment transaction to correct an administrative error.

For example, a promoter may have made a repayment from the wrong RESP. The promoter would then reverse the repayment transaction. Once he has done so, the RESP returns to the state it would have been if the repayment transaction was never successfully processed by the CESP system.

G.2. Mandatory reporting of RESP transactions

The promoter agreement 4.3(a) compels promoters to report transactions in and out of an RESP that are made after 1997. This includes the reporting of all transactions that occur within the RESP, whether there is a positive amount in the dollar field, or the amount is 0.

Here are examples of some RESP activities that require promoters to report them using a repayment reason:

• a withdrawal of contributions
• a plan termination
• an accumulated income payment (AIP)
• the Canada Revenue Agency (CRA) revokes the registration of an RESP
• when a promoter makes a payment to a designated educational institution
• ineligible beneficiary replacement
• ceases to meet the sibling only requirement
• ineligible transfer
• etc.

For more information, refer to section G.3. Repayment reason guidelines of this appendix.

G.3. Repayment reason guidelines

The CESP ITS lists 12 potential repayment reasons that promoters can use to report repayment transactions to the CESP system:

• 01 – Contribution withdrawal
• 02 – AIP
• 03 – Contract termination
• 04 – Ineligible transfer
• 05 – Ineligible beneficiary replacement
• 06 – Payment to educational institution
• 07 – Revocation
• 08 – Ceases to meet sibling only condition
• 09 – Deceased
• 10 – Over‑contribution withdrawal
• 11 – Other
• 12 – Non‑resident

While some of these repayment reasons correspond to specific regulatory requirements, other repayment reasons are available for administrative purposes.

A separate subheading under this section of the appendix explains each repayment reason to identify:

• circumstances that trigger repayments
• when promoters must repay incentives administered by ESDC
• how much incentive amount promoters must repay

This section also specifies repayment transactions that promoters must submit to the CESP system. Promoters should consult section G.4. Transaction checklists of this appendix to ensure that they use repayment transactions appropriately and report all required RESP activity to the CESP system.

G.3.1. Reason "01" – Contribution withdrawal

Trigger: When subscribers withdraw contributions from an RESP.

Promoters must repay the following incentives:

• the CESG
• the SAGES

Promoters should not submit a repayment transaction (400‑21) using repayment reason "01" in the following situations:

• if the subscriber withdraws contributions to correct an over‑contribution, promoters must submit a repayment transaction (400‑21) using repayment reason "10". For more information, refer to section G.3.10. Reason "10" – Over‑contribution withdrawal in this appendix
• if the subscriber withdraws contributions when a beneficiary of the RESP is eligible for an educational assistance payment (EAP). In that case, the promoter must submit a post‑secondary education (PSE) contribution withdrawal transaction (400‑14). Furthermore, the promoter does not have to repay the CESG or the SAGES

In all other situations, when subscribers withdraw RESP contributions and the CESP system paid the CESG or the SAGES, promoters must submit a repayment transaction (400‑21). They will use repayment reason "01" for the incentives that were paid to the RESP, even if the amounts to repay are 0 at the time of the withdrawal.

G.3.1.1. Calculating the CESG amount to repay for reason "01"

When a subscriber withdraws RESP contributions from RESP notional accounts, the order of withdrawals are as follows:

1. assisted contributions made in 1998 or later
2. unassisted contributions made in 1998 or later
3. unassisted contributions made prior to 1998

An assisted contribution is an RESP contribution that has attracted a CESG payment to the RESP. An unassisted contribution is an RESP contribution that has not attracted a CESG payment to the RESP.

The CESG repayment amount due to a withdrawal of assisted contributions is equal to: A / B × C

Where:

• A = balance in the CESG account of the RESP immediately before the withdrawal of assisted contributions
• B = balance of the total assisted contributions in the RESP immediately before the withdrawal of assisted contributions
• C = amount of the assisted contributions withdrawal

A subscriber could withdraw all assisted contributions while a beneficiary is eligible for an EAP (in PSE contribution withdrawals). In that case, unassisted contributions and the CESG can remain in the RESP. If the subscriber later on withdraws these unassisted contributions from the RESP when a beneficiary is no longer eligible for an EAP, the amount of the CESG to repay would be 0.

G.3.1.2. Calculating the SAGES amount to repay for reason "01"

The SAGES repayment amount due to a withdrawal of contributions is equal to the lesser of the following amounts:

• 10% of the withdrawal amount
• the SAGES account balance before the withdrawal

The government of Saskatchewan may waive the requirement for a SAGES repayment due to the withdrawal of contributions. They can do so if the repayment would cause undue hardship for a subscriber.

To request a waiver of repayment of the SAGES, the subscriber must complete and submit the Request for Waiver of Repayment of the SAGES form for an existing RESP. He must then submit it to the Saskatchewan Ministry of Advanced Education within 12 months of the contribution withdrawal. For additional information, refer to Chapter 8. Saskatchewan Advantage Grant for Education Savings and 8.8.2.2. Waiver of repayment.

G.3.2. Reason "02" – AIP

Trigger: When a promoter makes an AIP.

Promoters must repay the following incentives:

• the CESG
• the CLB
• the SAGES
• the BCTESG

An AIP is a taxable payment of accumulated income in an RESP. The subscriber is normally the one who receives the payment. The AIP may include accumulated income on contributions and incentives, but it does not include the actual contributions or incentives themselves.

Rollovers to a registered retirement savings plan (RRSP): The subscriber has to include AIPs in their income for the year they received the payments. The payments are subject to a 20% (12% for residents of Quebec) additional tax. This means that it's on top of the regular tax rate payable on the subscriber's income. The subscriber can reduce or eliminate this additional tax by contributing the AIPs to his or her RRSP or to a spousal RRSP, up to a maximum of $50,000.

Rollovers to a registered disability saving plan (RDSP): A subscriber of an RESP and a holder of an RDSP may jointly elect to transfer an AIP under the RESP to the RDSP. They can do so by under the prescribed CRA rollover form (RC435). This applies since 2014 and later years, and is possible if at the time of the election, the RESP allows AIPs the RESP beneficiary is also the beneficiary of the RDSP.

For additional information about rollovers, consult the CRA Income Tax Information Circular IC93‑3R2.

The promoter may issue AIPs only if the subscriber meets all of the following conditions:

• the subscriber is a resident of Canada
• the promoter makes the payment to, or on behalf of, a subscriber and not jointly to, or on behalf of, more than one subscriber

And

• the plan has been in existence for at least 10 years, and each living individual who is, or was a beneficiary under the plan, has reached 21 years of age before the promoter makes the payment and the beneficiary is not currently eligible to receive EAPs, or
• the promoter makes the AIP and terminates the RESP, or
• each individual, who was a beneficiary under the plan, is deceased when the promoter makes the payment

When promoters make AIPs, they must repay:

• the CESG
• the CLB
• the SAGES, or
• the BCTESG

To do so, they will:

• promoters must submit a repayment transaction (400‑21)
• they must use the repayment reason "02" for the incentives paid to the RESP
• even if the amounts to repay are 0 at the time of the AIP

G.3.2.1. Calculating the incentive amounts to repay for reason "02"

When the promoter makes AIPs, the promoter must repay the remaining amounts of the following incentives in the plan (immediately before the AIP):

• the CESG
• the CLB
• the SAGES
• the BCTESG

G.3.2.2. Other AIP consequences

When the promoter makes an AIP from an RESP:

• the promoter must terminate the RESP before March in the year after the year in which the first AIP is made, and
• the promoter can no longer permit a transfer from this RESP

G3.3. Reason "03" – Contract termination

Trigger: When a promoter terminates the RESP.

Promoters must repay the following incentives:

• the CESG
• the CLB
• the SAGES
• the BCTESG

The terms and conditions of an RESP contract specifies when a promoter must terminate a plan.

They must terminate RESPs at the end of the 35th year, after the end of the year in which it was deemed to have been opened.

Exception: 40th year for individual RESPs in which the beneficiary is eligible for a disability tax credit.

Following the transfer of RESP funds, the earliest effective date of the relinquishing and the receiving RESPs is deemed the date the plan was open.

When the promoter terminates an RESP and there were payments of the CESG, the CLB, the SAGES or the BCTESG in the RESP:

• promoters must submit a repayment transaction (400‑21)
• promoters must use repayment reason "03" for the incentives that remain in the RESP
• even if the amounts to repay are 0 at the time of the contract termination

G.3.3.1. Calculating the incentive amounts to repay for reason "03"

When a promoter terminates an RESP, the promoter must repay the remaining amounts of the following incentives in the plan (immediately before the termination):

• the CESG
• the CLB
• the SAGES
• the BCTESG

G.3.3.2. Other potential repayment reasons when the promoter terminates an RESP

Promoters may need to report multiple repayment transactions with different repayment reasons. This will depend on how the promoter distributes the funds in the RESP when they terminate it.

Promoters must submit a repayment transaction (400‑21) for each of the reasons specified in the following sequence when the circumstances occur:

1. reason 01 – Contribution withdrawal:
   • the promoter returns RESP contributions to the subscriber(s), and
   • the withdrawal of contributions would trigger the repayment of the CESG or the SAGES
2. reason 02 – AIP:
   • the promoter pays an AIP from the RESP
3. reason 06 – Payment to educational institution:
   • the subscriber does not meet the conditions for an AIP, and
   • a promoter makes a payment of accumulated income to a designated educational institution in Canada
4. reason 03 – Contract termination:
   • the promoter or the subscriber terminates an RESP, or
   • a promoter must terminate an RESP when the RESP has reached the maximum duration

G.3.4. Reason "04" – Ineligible transfer

Trigger: An RESP does not satisfy the conditions for an eligible transfer.

Promoters must repay the following incentives:

• the CESG
• the CLB
• the SAGES
• the BCTESG

An ineligible transfer occurs when the transfer does not meet the required conditions. Chapter 9. Registered Education Savings Plan transfers and the education savings incentives specifies the required conditions for an eligible transfer of each incentive administered by ESDC.

When an ineligible transfer occurs and the RESP contains the CESG, the CLB, the SAGES or the BCTESG:

• the relinquishing promoter must submit a repayment transaction (400‑21)
• using repayment reason "04" for the incentives remaining in the RESP
• even if the amounts to repay are 0 at the time of the ineligible transfer

G.3.4.1. Calculating the incentive amounts to repay for reason "04"

When an ineligible transfer occurs, the promoter must repay the remaining amounts of the following incentives in the relinquishing RESP (immediately before the ineligible transfer):

• the CESG
• the CLB
• the SAGES
• the BCTESG

G.4.2. Avoiding ineligible transfers by making pre‑transfer repayments

Prior to a transfer, promoters may repay one or more incentives to avoid conditions that would otherwise result in an ineligible transfer.

For example, if the receiving promoter does not offer the SAGES, the transfer would be ineligible if it included the SAGES amounts. To avoid an ineligible transfer, the relinquishing promoter could repay the balance of the SAGES account prior to the transfer. This would allow for the eligible transfer of the remaining funds.

If the ineligible incentive is the Additional CESG, the A‑B Transfer Policy allows a receiving promoter to accept a transfer including the Additional CESG. They can do so if the receiving promoter agrees to administer the Additional CESG sibling only rule. They also need to report the presence of the Additional CESG in subsequent transfers.

For additional information, refer to 9.3.4. Making pre‑transfer repayments to avoid ineligible transfers and 9.3.5. When the receiving promoter does not offer Additional CESG in Chapter 9. Registered Education Savings Plan transfers and the education savings incentives.

G.3.5. Reason "05" – Ineligible beneficiary replacement

Trigger: When a promoter replaces an original beneficiary with an ineligible beneficiary.

Promoters must repay the following incentives:

• the CESG
• the CLB
• the SAGES
• the BCTESG

In both individual and family RESPs, subscribers can replace an existing beneficiary with a new beneficiary if their contract allows this replacement.

In order to consider a beneficiary replacement to be eligible:

• 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

For all other beneficiary replacements, if the RESP contains the CESG, the CLB, the SAGES or the BCTESG:

• promoters must submit a repayment transaction (400‑21)
• using repayment reason "05" for the incentives remaining in the RESP
• even if the amounts to repay are 0 at the time of the beneficiary replacement

G.3.5.1. Calculating the incentive amounts to repay for reason "05"

The promoter must repay the remaining amounts of the following incentives in the plan (immediately before the ineligible beneficiary replacement):

• the CESG
• the CLB
• the SAGES
• the BCTESG

G.3.5.2. Replacing a beneficiary with a cousin

It is possible for a subscriber to choose a cousin as an eligible replacement beneficiary. For example, the subscriber could be a grandparent who is related by blood or adoption to the original and replacement beneficiaries.
However, replacement beneficiaries must also satisfy sibling‑only requirements for some incentives. For more information, refer to G.3.8. Reason "08" – Ceases to meet sibling only condition.

G.3.5.3. Replacing a beneficiary for whom the promoter paid the CLB

The CESP system pays the CLB into RESPs for specific beneficiaries. The beneficiary can only use his own CLB for EAPs. In other words, the beneficiary cannot share the CLB with siblings in a family RESP.
This means that the promoter must repay the CLB account balance of the original beneficiary, even if they met the conditions for an eligible beneficiary replacement. For more information, refer to G.3.11. Reason "11" – Other.

G.3.6. Reason "06" – Payment to educational institution

Trigger: When a promoter makes a payment of the accumulated income remaining in an RESP to a designated educational institution in Canada.

Promoters must repay the following incentives:

• the CESG
• the CLB
• the SAGES
• the BCTESG

The terms of an RESP can stipulate that the promoter may pay the amount of AIP to a designated educational institution in Canada if:

• a beneficiary is not eligible for an EAP, and
• a subscriber does not qualify for an AIP

A payment to a designated educational institution in Canada is considered a gift and not a donation. Therefore, the promoter will not issue a tax receipt to the subscriber or to the beneficiary.

When a promoter makes AIP to a designated educational institution in Canada and the RESP contains the CESG, the CLB, the SAGES or the BCTESG, promoters must:

• submit a repayment transaction (400‑21), and
• use repayment reason "06" for the incentives remaining in the RESP
• even if the amounts to repay are 0 at the time of the payment to the educational institution

G.3.6.1. Calculating the incentive amounts to repay for reason "06"

Once they made the payment, the promoter must repay the remaining amounts of the following incentives in the plan (immediately before the payment to the educational institution):

• the CESG
• the CLB
• the SAGES
• the BCTESG

G.3.7 Reason "07" – Revocation

Trigger: When the Canada Revenue Agency (CRA) revokes the registration of the RESP.

Promoters must repay the following incentives:

• the CESG
• the CLB
• the SAGES
• the BCTESG

If an RESP fails to comply with legislative requirements for any reason, CRA may revoke the registration of the contract. The Minister of National Revenue can revoke the registration of an RESP under the following conditions:

• the plan does not comply with the rules for registration
• the plan does not comply with any of its provisions
• the subscriber makes an excess of contributions to the plan
• the plan is in a revocable position related to qualified investments, or
• when the RESP does not meet a condition under:
  • the Canada Education Savings Act (CESA),
  • the Canada Education Savings Regulations (CESR), or
  • a condition related to a designated provincial program

When the CRA revokes the registration of an RESP and the RESP contains the CESG, the CLB, the SAGES or the BCTESG:

• promoters must submit a repayment transaction (400‑21)
• promoter must use repayment reason "07″ for the incentives remaining in the RESP
• even if the amounts to repay are 0 when the CRA revoked the plan registration

G.3.7.1. Calculating the incentive amounts to repay for reason "07"

The promoter must repay the remaining amounts of the following incentives in the plan (immediately before the CRA revoked the plan registration):

• the CESG
• the CLB
• the SAGES
• the BCTESG

G.3.8. Reason "08" – Ceases to meet sibling only condition

Trigger: When a subscriber adds a cousin as a new beneficiary in a family RESP.

Promoters must repay the following incentives:

• the CESG
• the CLB
• the BCTESG

The CESP system can only pay the following incentives into an individual RESP or a family RESP:

• the Additional CESG
• the CLB
• the SAGES
• the BCTESG

Furthermore, the beneficiaries of the family RESP must be brothers and sisters (no cousins).

Once the CESP system paid those incentives into an eligible family RESP, the subscriber must be careful if he subsequently names a new beneficiary. He must ensure that the new beneficiary is either a brother or sister of the other beneficiaries. If not, this may trigger a repayment of incentives.

G.3.8.1. Updating the "individual/sibling only" status of an RESP

When a subscriber adds a cousin to a family RESP, the promoter must submit a new contract information record (100‑01) to the CESP system. The promoter must ensure that the "individual/sibling only" field set to "0" (No).

G.3.8.2. The CESG and reason "08"

A subscriber adds a cousin as a new beneficiary in a family RESP. If the CESP system paid the Additional CESG into this RESP, the promoter must:

• submit a repayment transaction (400‑21), and
• use repayment reason "08" for the CESG
• even if the amount to repay is 0 when the RESP ceased to satisfy the sibling only condition

The amount of CESG to repay is the entire CESG account balance immediately before the subscriber added a cousin as a new beneficiary. This includes both the Basic CESG and the Additional CESG amounts.

G.3.8.3. The CLB and reason "08"

When a subscriber adds a cousin as a new beneficiary in a family RESP and the CESP system paid the CLB into this RESP, promoters must:

• submit a repayment transaction (400‑21), and
• use repayment reason "08" for each beneficiary for whom the CLB was paid in the RESP
• even if the amount to repay is 0 when the RESP ceased to satisfy the sibling only condition

The amount of the CLB to repay is the quite simple. It is the total balance of all the CLB accounts in the RESP immediately before the subscriber names a cousin as a new beneficiary.

G.3.8.4. The SAGES and reason "08"

The CESP system can only pay SAGES into an individual RESP or a family RESP in which all beneficiaries are siblings. However, a subscriber can add a cousin to the family plan and not repay any of the SAGES amounts that may have already been paid or transferred to the RESP.

The promoter should not submit a repayment transaction for the SAGES if they add a cousin to a family RESP. However, once the promoter named a cousin to a family RESP, they must stop requesting the SAGES for all subsequent contributions made to this RESP.

G.3.8.5. The BCTESG and reason "08"

When the subscriber adds a cousin as a new beneficiary in a family RESP and the CESP system paid the BCTESG this RESP, promoters must:

• submit a repayment transaction (400‑21), and
• use repayment reason "08" for the BCTESG
• even if the amount to repay is 0 when the RESP ceased to satisfy the sibling only condition

The amount of the BCTESG to repay is the entire BCTESG account balance immediately before the subscriber named the cousin as a new beneficiary.

G.3.9. Reason "09" – Deceased

Trigger: The beneficiary of the RESP is deceased.

When an RESP beneficiary dies and the CESP system paid the CLB into the RESP in respect of the deceased beneficiary, promoters must:

• submit a repayment transaction (400‑21), and
• use repayment reason "09" for the CLB account balance of the deceased beneficiary
• even if the amount to repay is 0 when the beneficiary died

The death of a beneficiary does not necessarily trigger a repayment of the other incentives administered by ESDC because they can use those funds:

• for other beneficiaries of the same RESP
• for an eligible replacement beneficiary in the same RESP, or
• transferred to another RESP

The CESP system may have paid other incentives administered by ESDC (other than the CLB) into the RESP. If the subscriber cannot use those incentives in the RESP or transfer them to another RESP, promoters may:

• submit a repayment transaction (400‑21), and
• use a repayment reason "09" for the entire account balances of these incentives
• even if an amount to repay is 0 when the beneficiary died

G.3.10. Reason 10 – Over‑contribution withdrawal

Trigger: The subscriber withdraws contributions from an RESP to correct an over‑contribution for a beneficiary.

Promoters must repay the following incentives:

• the CESG
• the SAGES

From 1996 to 2006, the lifetime contribution limit was $42,000 per beneficiary and the annual contribution limit was $4,000 per beneficiary. In 2007 or later, the annual contribution limit no longer applies and the lifetime RESP contribution limit is now $50,000 per beneficiary. This lifetime limit applies for all contributions made for a beneficiary across all RESPs in which he is a beneficiary.

Exceeding the $50,000 lifetime contribution limit per beneficiary could result in a penalty tax for the subscriber. This penalty is equal to 1% per month of the over‑contribution amount until subscribers withdraw the excess contributions.

When subscribers withdraw RESP contributions to correct an over‑contribution and the plan contains the CESG or the SAGES, promoters must:

• submit a repayment transaction (400‑21)
• use repayment reason "10" for the incentives that were paid to the RESP
• even if the amounts to repay are 0 at the time of the withdrawal

G.3.10.1. Calculating the CESG amount to repay for reason "10"

RESP contributions are deemed to be withdrawn from the RESP notional accounts in the following order:

• assisted contributions made in 1998 or later
• unassisted contributions made in 1998 or later, then
• unassisted contributions made prior to 1998

The lifetime contribution amount for a beneficiary could be greater than $54,000. In that case, the CESG repayment amount due to a withdrawal to correct an over‑contribution is equal to: A / B × C

Where:

• A = balance in the CESG account of the RESP immediately before the withdrawal of assisted contributions
• B = balance of the total assisted contributions in the RESP immediately before the withdrawal of assisted contributions
• C = amount of the assisted contributions withdrawal

The lifetime contribution amount for a beneficiary could always be $54,000 or less. In that case, the CESG repayment amount due to a withdrawal to correct an over‑contribution is equal to 0.

For example, Julie's parents open one individual RESP for her. There is no other plan in existence. The following bulleted list shows the notional account balances on January 1, 2018:

• assisted contributions: $36,000
• unassisted contributions: $13,500
• total contributions: $49,500
• CESG: $7,200

On January 15, 2018, Julie's parents contributed another $5,000 into the RESP, bringing Julie's lifetime contribution amount to $54,500.
The promoter informed Julie's parents that this last contribution resulted in Julie exceeding the lifetime contribution amount of $50,000 by $4,500. Julie's parents asked the promoter to immediately withdraw $4,500 from their contributions. This helped to minimize the 1% tax penalties per month on the amount that exceeded the $50,000 lifetime limit.

As Julie's lifetime contributions had exceeded the $54,000 limit, the promoter must use the prescribed formula to determine the amount of CESG to repay:

CESG amount to repay = A / B × C

Where:

• A = $7,200
• B = $36,000 
• C = $4,500

Therefore, the amount of CESG that the promoter must repay is:

A / B × C = $7,200 / $36,000 × $4,500 = $900

The promoter must withdraw the full $4,500 from the assisted contribution notional account. This is because a subscriber must withdraw all assisted contributions before they can withdraw any unassisted contributions.

Had the contribution on January 15, 2018, been only $4,000, the lifetime contribution amount would have been only $53,500. Therefore, Julie's parents could have withdrawn $3,500 to correct Julie's lifetime over‑contribution amount without having to repay any CESG.

When a subscriber withdraws an over‑contribution of $4,000 or less, the subscriber must inform the promoter. As an example, the subscriber may use the form entitled Subscriber Statement for an RESP Over‑contribution Withdrawal of $4,000 or less. For more information, refer to Appendix D. Forms index. The promoter must keep this document or other declaration with the client's file. It represents a record as to why the RESP promoter did not submit a CESG/SAGES repayment amount when a withdrawal of contributions occurred. This type of over‑contribution withdrawal may be subject to a compliance review by ESDC.

For more information, refer to 5.8.2. Withdrawal of contributions in Chapter 5. The Canada Education Savings Grant.

G.3.10.2. Calculating the SAGES amount to repay for reason "10"

When the beneficiary contribution amount is greater than $54,000, the promoter needs to repay the SAGES due to a withdrawal to correct the over‑contribution. The amount to repay is equal to the lesser of the following amounts:

• 10% of the withdrawal amount
• the SAGES account balance before the withdrawal

The government of Saskatchewan may waive the requirement for a SAGES repayment due to the withdrawal of contributions. It can do so if the repayment would cause undue hardship for a subscriber.

To request a waiver of repayment for the SAGES the subscriber:

• must complete and submit the SAGES Waiver of Repayment form for an existing RESP, and
• submit it to the Saskatchewan Ministry of Advanced Education within 12 months of the RESP contribution withdrawal transaction date

For additional information, refer to Chapter 8. Saskatchewan Advantage Grant for Education Savings and 8.8.2.2. Waiver of repayment.

The lifetime contribution amount for a beneficiary could be $54,000 or less. In that case, the SAGES repayment amount due to a withdrawal to correct an over‑contribution is equal to 0.

G.3.11. Reason "11" – Other

Trigger: A miscellaneous situation occurs.

Promoters may have to repay the following incentives:

• the CESG
• the CLB
• the SAGES
• the BCTESG

Promoters may use this repayment reason to repay incentives for situations that do not fall under another reason code. In some cases, CESP promoter support officers may also instruct promoters to use this repayment reason.

G.3.11.1. When an EAP is made to an individual who is not a beneficiary

A promoter could issue an EAP to an individual who is not a beneficiary of the RESP. If this happens, and the RESP contains the CESG, the CLB, the SAGES or the BCTESG, the promoter must repay them. The promoter will:

• submit a repayment transaction (400‑21), and
• use repayment reason "11" for the incentives that remain in the RESP, even if the amounts to repay are 0

G.3.11.2. The CLB and reason "11"

If there was an eligible beneficiary replacement of a beneficiary for whom the CLB was paid to the RESP, promoters must:

• submit a repayment transaction (400‑21), and
• use repayment reason "11" for the CLB
• even if the amount to repay is 0

The amount of CLB to repay is the entire CLB account balance paid in the RESP for the original beneficiary.

G.3.11.3. The BCTESG and reason "11"

If a subscriber withdraws all or part of the BCTESG and they do not use it in an EAP, promoters must:

• submit a repayment transaction (400‑21), and
• use repayment reason "11" for the BCTESG in the RESP
• even if the amount to repay is 0

The amount of BCTESG to repay is the entire BCTESG account balance.

Promoters would also need to repay the BCTESG if an application for the BCTESG contained false information.

G.3.12. Reason "12" – Non‑resident

Trigger: The beneficiary no longer satisfies residency requirements.

Promoters may have to repay the following incentives:

• the CESG
• the CLB
• the BCTESG
• the SAGES

Promoters would use this repayment reason "12" to repay incentives when the beneficiary no longer satisfies the required residency requirements.

G.3.12.1. The CESG and reason "12"

Promoters should request the CESG on a contribution only if the beneficiary was a resident of Canada at the time of the contribution. A promoter may learn that a subscriber contributed for a beneficiary after a family has moved. In that case, it is possible that the beneficiary is no longer considered to be a resident of Canada. In that situation, the promoter must:

• submit a repayment transaction (400‑21), and
• use repayment reason "12"

The amount of the CESG repaid should correspond to the CESG amounts that were paid into the RESP for these ineligible contributions.

The Canada Education Savings Regulations also specify the amount of CESG to include in an EAP. Promoters can include the CESG in an EAP on one condition. The beneficiary needs to be a resident of Canada for income tax purposes at the time of the EAP. It could happen that the beneficiary does not satisfy EAP residency criteria to receive the CESG portion in an EAP. If that happens, the promoter should not repay this CESG amount. This CESG amount can remain until:

• the beneficiary satisfies the required criteria to receive the CESG in an EAP, or
• the subscriber terminates the RESP

G.3.12.2. The CLB and reason "12"

A beneficiary can receive the CLB only if he was a resident of Canada immediately before the payment of the CLB. A promoter may learn that an RESP has received the CLB payments for a beneficiary after a family has moved. In that case, it could mean that the beneficiary is no longer a resident of Canada. In that situation, promoters must:

• submit a repayment transaction (400‑21), and
• use repayment reason "12"

The amount of the CLB that the promoter should repay corresponds to the CLB amount(s) paid into the RESP after the beneficiary was no longer considered to be a resident of Canada.

The Canada Education Savings Regulations also specify the amount of CLB to include in an EAP. However, promoters can include it only if the beneficiary is considered to be a resident of Canada for income tax purposes at the time of the EAP. It could happen that the beneficiary does not satisfy EAP residency criteria to receive the CLB portion in an EAP. In that case, the promoter should not repay this CLB amount. It can remain in the RESP until the beneficiary satisfies the required criteria to receive it or the subscriber terminates the plan.

G.3.12.3. The BCTESG and reason "12"

A beneficiary can receive the BCTESG only if he and the custodial parents (or legal guardian) are residents of British Columbia at the time of the application. The subscriber and custodial parent (or legal guardian) must sign a declaration on the BCTESG application form. This will confirm that this residency criterion has been satisfied.

If a promoter learns that an RESP has received a BCTESG payment and the application for BCTESG contained false information concerning the residency criteria:

• promoters must submit a repayment transaction (400‑21) using repayment reason "12", and
• promoters should repay the full amount of BCTESG received as a result of this application

G.3.12.4. The SAGES and reason "12"

Promoters may request SAGES for an RESP contribution only if the beneficiary was a resident of Saskatchewan at the time of the contribution.
Subscribers are responsible for informing promoters about changes to beneficiary residency status. Going forward, promoters must not request new SAGES payments for new contributions.

A subscriber may inform a promoter about changes to beneficiary residency status after the beneficiary receives the SAGES for ineligible contributions. In that situation, these SAGES amounts cannot remain in the RESP.

Submitting a repayment transaction (400‑21) to repay these subsequent SAGES amounts with a repayment reason of "12" would not restore the repaid amounts to the beneficiary's grant room. Therefore, promoters should cancel the SAGES requests (410‑31) instead. Cancelling the SAGES requests will restore the corresponding SAGES amounts to the beneficiary's grant room. This means that it would remain available if the beneficiary becomes a resident of Saskatchewan in the future.

G.4. Transaction checklists

We encourage promoters to consult the following checklists in this section. This will help them ensure that they report all required RESP activity to the CESP system and that it is successfully processed. This applies when the circumstances or assets of an RESP has changed. The checklists are:

• G.4.1. Plan terminations
• G.4.2. Withdrawal of contributions
• G.4.3. Transfers
• G.4.4. Adding cousins to family RESPs

For more information, refer to G.3. Repayment reason guidelines in this appendix on each repayment reason, concerning:

• circumstances that trigger repayments
• incentives administered by ESDC that promoters must repay, and
• incentive amounts that promoters must repay

G.4.1. Plan terminations

When a promoter terminates an RESP, they can use the following questions to ensure that they have submitted all appropriate transactions to the CESP system.

Are there contributions remaining in the RESP? If so, will the promoter return them to the subscriber(s)?

If the answer to this question is yes, promoters may need to repay some incentives. If the withdrawal normally triggered the repayment of the CESG or the SAGES, promoters must submit repayment transactions for these incentives. They would use reason "01", even if the repayment amounts are 0.

Did the promoter pay an AIP from this RESP?

If the answer to this question is yes, promoters will first need to repay the required amounts of incentives for repayment reason "01" (if applicable). After that, they will repay all remaining amounts of the CESG, the CLB, the SAGES and the BCTESG and will use reason "02". A repayment transaction is mandatory for repayment reason "02", even if the repayment amounts are 0.

Has there been a payment of accumulated income to a designated educational institution in Canada? This would be because the conditions to receive an AIP have not been satisfied.

If the answer to this question is yes, promoters will first need to repay the required amounts of incentives for repayment reason "01" (if applicable). After that, they will repay all remaining amounts of the CESG, the CLB, the SAGES and the BCTESG and will use reason "06". A repayment transaction is mandatory for repayment reason "06", even if the repayment amounts are 0.

Has the subscriber asked the promoter to terminate the RESP? Or, must the RESP be terminated because it has been open for the maximum time limit?

If the answer to this question is yes, promoters will first need to report the required transactions with repayment reasons "01", "02" and "06" (if applicable). After that, promoters must repay any remaining incentives administered by ESDC and use reason "03". Repayment transactions are mandatory for repayment reason "03", even if the repayment amounts are 0.

Did the primary caregiver (PCG) designate this RESP as being the RESP that will receive the annual CLB payments?

If the answer to this question is yes, promoters need to stop subsequent CLB payments to this RESP. To do so, they must submit a CLB request (400‑24) to the CESP system with the "grant requested" field set to "0" (No). This needs to be done for each beneficiary with an active CLB request in the RESP.

G.4.2. Withdrawal of contributions

When a subscriber withdraws contributions from an RESP, promoters can use the following questions. This will ensure that they submit all appropriate transactions to the CESP system.

Have there been investment losses in the RESP assets at the time of contract termination?

If the answer to this question is yes, the promoter must subtract the notional account balances of all incentives in the RESP from the fair market value of the RESP. This will determine the maximum amount of contributions that the promoter can return to the subscriber.

Is a beneficiary in the RESP eligible to receive an EAP?

If the answer to this question is yes, a promoter must report a contribution withdrawal to the CESP system using a PSE contribution withdrawal (400‑14) transaction. As contribution withdrawals in this situation do not trigger a repayment of the CESG or the SAGES, the promoter is not required to submit a repayment transaction (400‑21). As a reminder, promoters need to ensure that they receive the required proof of enrollment to assess the eligibility to receive an EAP.

Was the withdrawal of contributions to correct an over‑contribution for a beneficiary?

If the answer to this question is yes and the RESP contains the CESG or the SAGES, the promoter must report a repayment transaction. They would use reason "10" for the CESG and the SAGES, even if the amounts to repay are 0.

If the over‑contribution amount is not greater than $4,000, the amounts of the CESG and the SAGES to repay are 0. Otherwise, the promoter must use the prescribed formulas to calculate the amount of the CESG and the SAGES to repay.

If the withdrawal of contributions would normally trigger the repayment of the SAGES, would this repayment cause undue hardship to the subscriber?

If the answer is yes, the promoter may inform the subscriber about the process to request a waiver of repayment for the SAGES. The subscriber must complete and submit the Request for Waiver of Repayment of the SAGES form for an existing RESP. He then must submit it to the Saskatchewan Ministry of Advanced Education within 12 months of the contribution withdrawal.

For additional information, refer to Chapter 8. Saskatchewan Advantage Grant for Education Savings and 8.8.2.2. Waiver of repayment.

G.4.3. Transfers

When a subscriber transfers funds from an RESP to another, promoters can use the following questions. This will ensure that they have submitted all appropriate transactions to the CESP system.

Are there any conditions that have not been satisfied for the eligible transfer of all incentives?

If the answer to this question is yes, the promoter must submit a repayment transaction. He will use repayment reason "04" for the CESG, the CLB, the SAGES and the BCTESG in the relinquishing RESP.

Prior to the transfer, the promoter may also repay only the incentives that would otherwise result in an ineligible transfer. To do so, he will use repayment reason "04", and then transfer all remaining assets in an eligible transfer.

Are there pending applications for incentives in the relinquishing RESP?

If the answer to this question is yes, the promoter of the relinquishing RESP will need to proceed with another transfer after the initial one. The relinquishing promoter will transfer any pending applications of incentives paid to the original RESP that he receives after the transfer of the funds. Promoters must submit new transfer‑out transactions (400‑23) and transfer‑in transactions (400‑19) to the CESP system to report these subsequent transfer amounts. Relinquishing promoters must also send amended transfer forms to the receiving promoters to indicate any subsequent transfer of funds.

Has the subscriber made a request to terminate the RESP after the completion of a full transfer?

If the answer to this question is yes, the relinquishing promoter must submit a repayment transaction. He will use repayment reason "03", even if the incentive amounts to repay are 0.

If the subscriber terminates the relinquishing RESP, did the PCG originally designate the relinquishing RESP as the RESP that would receive the annual CLB payments?

If the answer to this question is yes, the promoter will need to stop subsequent CLB payments to the relinquishing RESP. To do so, the relinquishing promoter must submit a CLB request (400‑24) to the CESP system with the "grant requested" field set to "0" (No). He needs to do so for each beneficiary with an active CLB request in the relinquishing RESP.

G.4.4. Adding cousins to family RESPs

A subscriber could add a cousin as a new beneficiary to a family RESP. In that case, promoters can use the following questions to ensure that they submit all appropriate transactions to the CESP system.

Did the promoter update the "individual/sibling only" designation for the RESP in the CESP system?

When a subscriber adds a cousin as a new beneficiary in an existing family RESP, the promoter must inform the CESP. The promoter will submit a new contract information (100‑01) record to the CESP system with the "individual/sibling only" field set to "0" (No).

Have there been any payments of the Additional CESG to the RESP?

If the answer to this question is yes, the promoter must submit a repayment transaction using reason "08" for the CESG. He must repay the entire CESG account balance, prior to adding the cousin. The CESG account balance includes both the Basic and the Additional CESG amounts paid into or transferred to the RESP.

Has there been a payment of the CLB in the RESP?

If the answer to this question is yes, the promoter must submit a repayment. He will need to submit a separate repayment transaction for the CLB using reason "08", for each beneficiary for whom the CLB was paid. He will have to repay the entire CLB account balance of each beneficiary in this RESP.

Has there been a payment of the SAGES in the RESP?

If the answer to this question is yes, going forward, the promoter must stop requesting the SAGES for all RESP contributions. However, any SAGES amounts already in the plan before adding the cousin to the plan can remain in the RESP.

Has there been a payment of the BCTESG in the RESP?

If the answer to this question is yes, the promoter must submit a repayment transaction using reason "08" for the BCTESG. The promoter must repay the entire BCTESG account balance, prior to adding the cousin.

G.5. Repayments and investment losses

G.5.1. Order of losses in an RESP

The following order applies RESP investment losses and promoters must consider adhere to it:

• first to the accumulated income in an RESP
• then to the RESP contributions, and
• if all contributions in the RESP are deemed to have been depleted due to investment losses, any remaining loss is deemed to be applied proportionally across the federal and provincial incentives that are remaining in the RESP

G.5.2. When there are insufficient funds to repay all incentives

Promoters can be required to repay only a total amount of incentives equal to the fair market value of the RESP. This happens if:

• the fair market value of an RESP is reduced due to investment losses, and
• the combined amount of incentives that must be repaid is greater than the current fair market value of the RESP

If the promoter must repay multiple incentives from an RESP, the federal and provincial incentives repayments must be proportional to the incentive account balances prior to the repayment.

Promoters must use a formula to repay the federal education savings incentives in cases where the fair market value is less than the total of the balance of the CESG and the CLB.

The list of events that triggers repayments when there is a significant investment loss in an RESP is described in the Canada Education Savings Regulations, subsection 11(3).

Formula to repay the federal education savings incentives in cases where the fair market value is less than the total of the balance of the CESG and the CLB

For example, a subscriber chooses to terminate an RESP which triggers the repayment of all remaining incentives in the plan. However, when the promoter terminates the RESP, the fair market value was less than the combined incentive notional account balances as shown in the bulleted list:

• RESP market value: $4,000
• earnings: $0
• contributions: $14,000
• CESG: $2,800
• SAGES: $1,400

The amount of incentives to repay in this example would normally be $4,200.

$2,800 in CESG + $1,400 in SAGES = $4,200 total balance of all incentive notional accounts.

The fair market value was less than the total amount of incentives to repay. In that case, the promoter must repay only a total amount of $4,000 (the fair market value).

Based on the federal education savings incentives repayment formula in cases where there is an investment loss in an RESP, the RESP promoter must repay $2,666.67 of CESG.

Calculation: Amount of the CESG that promoter needs to repay to ESDC

($4,000 × $2,800) / ($2,800 + $1,400) = $2,666.67

The remaining $1,333.33 in the RESP is the amount of the SAGES that the promoter will need to repay to ESDC.

Calculation: Amount of the SAGES that the promoter needs to repay to ESDC

$4,000 – $2,666.67 = $1,333.33

CESG repayable = $2,666.67

SAGES repayable = $1,333.33

Total repayable = $4,000

The promoter must report these repayment amounts to the CESP system in a repayment transaction (400‑21) with a repayment reason of "03".

When the promoter terminates the RESP, he must also submit a termination adjustment transaction (400‑22) to the CESP system. This will ensure that he reports the amount of incentives that he cannot repay due to investment losses. The promoter will report the amounts lost on each incentive. In this example, those amounts are:

• the CESG loss = $2,800 – $2,666.67 = $133.33
• the SAGES loss = $1,400 – $1,333.33 = $66.67
• total investment lost = $200

When repayment amounts are proportional to the incentive notional account balances, the investment loss is also shared by the federal and provincial incentives in the same proportion.

The CESG share of loss = $133.33 / $200 = 66.67% of the loss

The SAGES share of loss = $66.67 / $200 = 33.33% of the loss

Total share of investment losses = 100%

Promoter must only use termination adjustments:

• when they terminate an RESP, and
• investment losses prevent the full repayment of all incentives

When subscribers request contribution withdrawals after a market loss, promoters must determine the maximum contribution withdrawal amount. For additional information, refer to Chapter 3. The Canada Education Savings Program system and Interface Transaction Standards and section 3.5.13.5. Withdrawing contributions after a loss.