Chapter 2. Registered Education Savings Plan provider user guide – Key concepts

On this page

• List of acronyms
• Introduction
• 2.1. Legislative authorities – Employment and Social Development Canada and the Canada Revenue Agency
• 2.2. RESPs
• 2.3. RESP contribution limits
• 2.4. Social Insurance Number (SIN)
• 2.5. The beneficiary’s SIN – A unique identifier
• 2.6. Notional accounts and the education savings incentives
• 2.7. Key concepts specific to incentives

Introduction

There are a number of legislative and program elements that govern the delivery and administration of the following education savings incentives:

• Canada Education Savings Grant (CESG)
• Canada Learning Bond (CLB)
• British Columbia Training and Education Savings Grant (BCTESG)

Throughout this guide, we refer to these elements as “key concepts”. Unless otherwise indicated, the key concepts in this chapter apply to all education savings incentives. To view concepts that are unique to a particular incentive, refer to the following chapters:

• Chapter 5. The Canada Education Savings Grant
• Chapter 6. The Canada Learning Bond
• Chapter 7. British Columbia Training and Education Savings Grant

Relevant key concepts appear immediately following the corresponding eligibility criteria. An understanding of these concepts and requirements is very important. It will allow Registered Education Savings Plan (RESP) promoters to:

• assist the subscriber to apply for, and
• receive the education savings incentive(s) for which they qualify

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

2.1. Legislative authorities – Employment and Social Development Canada and the Canada Revenue Agency

Employment and Social Development Canada (ESDC) and the Canada Revenue Agency (CRA) work together in administering the education savings incentives and RESPs. They do so under the following legislative authorities:

• the Income Tax Act (ITA) governs RESPs – the vehicle used to deposit education savings incentives and save for the beneficiary’s post-secondary education
• the Canada Education Savings Act (CESA) authorizes payment of the CESG and the CLB
• the Canada Education Savings Regulations determine eligibility and ongoing administration of the CESG and the CLB
• the Special Accounts Appropriation and Control Act authorizes the payment of the BCTESG

2.2. RESPs

The subscriber initiates the incentive application process by entering into an education savings plan (ESP) with an RESP promoter. They also request at the same time the registration of the ESP with the CRA. Once successfully registered, it becomes a RESP. The RESP then becomes the account for contributions, education savings incentive payments, and accumulated earnings. For more information, refer to Chapter 4. Registered Education Savings Plans.

Certain incentives may have particular RESP-related requirements. Such requirements are addressed within the related incentive in the following chapters:

• Chapter 5. The Canada Education Savings Grant
• Chapter 6. The Canada Learning Bond
• Chapter 7. British Columbia Training and Education Savings Grant

2.3. RESP contribution limits

From 1998 to 2006, the ITA limited RESP annual contributions to a maximum of $4,000. The lifetime contributions limit was up to a maximum of $42,000 per beneficiary. For 2007 and future years, there is no longer an annual contribution limit. The lifetime contribution limit is now $50,000 per beneficiary.

The payments of education savings incentives into an RESP are not considered to be RESP contributions. Therefore, they are not included when calculating RESP contribution limits.

2.4. Social Insurance Number (SIN)

The Social Insurance Number (SIN) is a key information element used by the Canada Education Savings Program (CESP) system. For more information, refer to Chapter 3. The Canada Education Savings Program system and Interface Transaction Standards.

Both the subscriber and beneficiary require a SIN in order to establish and register an ESP.

When requesting the Additional CESG and the CLB for a beneficiary under 18 years of age, the SIN information of the individual primary caregiver (PCG) or their cohabiting spouse or common-law partner is also required. This information is not required when applying for the CLB for a beneficiary between 18 and 20 years of age. For a beneficiary in care of a public PCG, the promoter will require their business number (BN) to request these education savings incentives. When applying for the CLB for a beneficiary between 18 and 20 years of age, the PCG information is not required.

When applying for education savings incentives, verify SIN requirements outlined with the individual education savings incentive in the following chapters:

• Chapter 5. The Canada Education Savings Grant
• Chapter 6. The Canada Learning Bond
• Chapter 7. British Columbia Training and Education Savings Grant

2.5. The beneficiary’s SIN – A unique identifier

The CESP system uses the beneficiary’s SIN to:

• provide the CRA with registration information about the plan
• track RESP contributions and the education savings incentive payments for the beneficiary
• determine if the beneficiary has reached the contribution and education savings incentive limits

The beneficiary’s SIN information is subject to rigorous validation checks. It is critical to verify the accuracy of this information when completing the RESP process and applying for education savings incentives.

2.5.1. Applying for a SIN

The SIN application form and related information are available at a Service Canada office or by following Service Canada SIN application form.

2.6. Notional accounts and the education savings incentives

RESP consists of the following notional accounts:

• assisted contributions made to the RESP by the subscriber
• unassisted contributions made to the RESP by the subscriber
• CESG – combines the Basic CESG and the Additional CESG
• CLB – maintained in separate notional accounts for each beneficiary
• provincial incentives – maintained in separate notional accounts for each designated provincial program
• earnings

RESP promoters are responsible for maintaining records and books of account. This will enable ESDC to determine if they can pay education savings incentives or if promoters need to repay incentives.

When a financial transaction is processed, funds are deposited into or withdrawn from the appropriate notional account. This will depend on the nature of the transaction.

For example, they deposit contributions into the contribution notional account and education savings incentives into the related notional accounts (example: the CESG is deposited into the CESG notional account).

For education savings incentives administered by ESDC, the CESP system tracks these various activities. This is done for each beneficiary, to ensure they do not exceed the limits. When all or a portion of an education savings incentive must be repaid, the amount is withdrawn (repaid) from the notional account of that incentive.

You can find the requirements for reporting RESP transactions to the CESP system in the CESP Interface Transaction Standards (ITS). A downloadable version of the ITS is available on the Resources for RESP promoters web page under the Systems documentation tab.

2.6.1. Provincial incentives

An RESP promoter must be able to track transactions associated with each of the designated provincial programs that the promoter delivers to the public.

For example:

• promoters delivering the BCTESG have notional accounts to track all activities associated with the BCTESG. As ESDC administers the BCTESG, they report transactions associated with the BCTESG to the CESP system. The promoter reports them using the BCTESG notional account
• promoters delivering the Quebec Education Savings Incentive (QESI) have notional accounts to track all activities associated with the QESI. As ESDC does not administer the QESI, promoters do not report specific QESI amounts associated with RESP transactions to the CESP system

2.7. Key concepts specific to incentives

There are other important key concepts associated with, and unique to, each of the education savings incentives. We define and elaborate on them within each related chapters following:

• Chapter 5. The Canada Education Savings Grant
• Chapter 6. The Canada Learning Bond
• Chapter 7. British Columbia Training and Education Savings Grant

You can find them immediately after the corresponding eligibility criteria.