Chapter 8. Registered Education Savings Plan provider user guide – Saskatchewan Advantage Grant for Education Savings

On this page

• Alternate format
• List of acronyms
• Introduction
• 8.1. SAGES – An overview
• 8.2. Eligibility criteria
• 8.3. Calculating SAGES amounts
• 8.4. Annual SAGES limits and SAGES grant room
• 8.5. Lifetime SAGES limits
• 8.6. Applying for SAGES
• 8.7. Receiving and depositing SAGES
• 8.8. Repaying SAGES
• 8.9. Other transactions involving SAGES

Alternate format

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

Introduction

In 2013, the Government of Saskatchewan introduced the Saskatchewan Advantage Grant for Education Savings (SAGES). In this document, the “SAGES” acronym means the education savings incentive paid under the Saskatchewan Advantage Grant for Education Savings Act.

Employment and Social Development Canada (ESDC), Canada Education Savings Program (CESP), has partnered with the Government of Saskatchewan to administer this provincial education savings incentive.

Registered Education Savings Plan (RESP) promoters must be authorized by ESDC to offer SAGES or any other education savings incentive administered by ESDC.

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

8.1. SAGES – An overview

SAGES is an education savings incentive that is paid:

• by the Government of Saskatchewan
• from a designated provincial program administered by ESDC
• into an RESP
• at a rate of 10% of RESP contributions in respect of eligible beneficiaries, and
• for contributions made on or after January 1, 2013

Saskatchewan matches 10% of RESP contributions in SAGES amounts. The Government will match up to $250 per beneficiary for each eligible year, until the end of the calendar year in which a beneficiary turns 17. Total SAGES payments per beneficiary could reach $4,500 if the beneficiary is eligible from birth until age 17.

Each eligible beneficiary’s SAGES grant room increases by $250 per eligible year. However, the annual SAGES amount that the CESP will pay per beneficiary is limited to the lesser of:

• the accumulated SAGES grant room for the beneficiary, and
• the SAGES annual limit of $500

8.1.1. How it works

SAGES payments are based on the following requirements:

• an RESP: a subscriber must meet with a participating promoter, open an RESP and name an eligible beneficiary or beneficiaries. For more information, refer to Chapter 4. Registered Education Savings Plans
• eligibility criteria: the subscriber and participating review the SAGES eligibility criteria. For more information, refer to 8.2. Eligibility criteria
• application process: the subscriber asks the promoter to apply for SAGES for the beneficiary. For more information, refer to 8.6. Applying for SAGES
• RESP contributions: the RESP receives SAGES payments when the subscriber makes contributions to the RESP in respect of the beneficiary
• educational assistance payments (EAPs): when the beneficiary is enrolled in a post‑secondary education program, the subscriber can request an EAP. The EAP is paid from the earnings and education savings incentives (including SAGES) in the RESP. For more information, refer to Chapter 10. Post‑secondary education and educational assistance payments

8.2 Eligibility criteria

Consider the following eligibility criteria to determine if an RESP contribution is eligible for SAGES payments:

• has the subscriber established an RESP and named a beneficiary?
• does the promoter offer SAGES?
• is the RESP either an individual RESP or a family RESP in which each beneficiary is a brother or sister of every other beneficiary?
• was the beneficiary a resident of Saskatchewan when the RESP contribution was made?
• was the RESP contribution made on or before December 31st of the year in which the beneficiary turns 17?

8.2.1. RESP contributions and withdrawals

A subscriber must make RESP contributions in respect of an eligible beneficiary to receive SAGES payments in an RESP. These payments are subject to annual and lifetime limits. For more information, refer to 8.4. Annual SAGES limits and SAGES grant room.

8.2.2. Contributions and the SAGES age limit

To qualify for SAGES payments, a subscriber must make contributions to an RESP, in respect of an eligible beneficiary, on or before December 31 of the year in which the beneficiary turns 17.

8.2.3. Contributions for 16 and 17 year old beneficiaries

RESP contributions made during the calendar year in which the beneficiary turns 16 or 17 years of age must satisfy one of the following conditions to be eligible for SAGES:

• a subscriber makes a minimum of $100 in annual RESP contributions in respect of the beneficiary, and they are not withdrawn. This can be done in any 4 years (consecutive or not), by December 31st in the year the beneficiary turned 15, or
• a subscriber makes a minimum of $2,000 in RESP contributions in respect of the beneficiary, and they are not withdrawn. This has to be done by December 31st in the year the beneficiary turned 15

8.2.3.1. Example – 4 years of at least $100 in contributions per year

Liam’s grandfather opened an RESP for him on his 12th birthday (January 6, 2009) and made $10 in pre‑authorized contributions per month as summarized in the table below.

Liam satisfies the 16 and 17 year rule for SAGES eligibility for RESP contributions at the age of 16 and 17. This meets the first condition. First, at least $100 per year in RESP contributions were made for Liam. In addition, they were made in at least 4 separate years before the end of the calendar year in which Liam turned 15.

8.2.3.2. Example – At least $2,000 in contributions

Nancy’s parents opened an RESP for her on March 3, 2011, when she was 14 years old. They made $1,000 in annual RESP contributions for her in 2011 and 2012, as summarized in the table below.

Nancy satisfies the 16 and 17 year rule for SAGES eligibility for RESP contributions at the age of 16 and 17. The reason is at least $2,000 in RESP contributions were made for Nancy before the end of the calendar year in which she turned 15.

8.3 Calculating SAGES amounts

SAGES formula: RESP contribution × 10% = SAGES amount

The amount of SAGES paid into an RESP is 10% of the qualifying RESP contributions.

8.3.1. Example of calculating SAGES amounts

Liam’s grandfather opened an RESP on his 12th birthday (January 6, 2009). He made $10 in pre‑authorized contributions per month as summarized in the table below.

The contributions to Liam’s RESP prior to 2013 did not attract any SAGES amounts. The Government of Saskatchewan only began paying SAGES for contributions made on January 1, 2013, or later. For each monthly contribution of $10 in 2013 or later, Liam’s RESP received $1 in SAGES payments (10% of $10). Liam received a total of $12 in SAGES payments per year.

Note that Liam also satisfies the required eligibility criteria for SAGES at the age of 16 and 17. For more information, refer to 8.2.3. Contributions for 16 and 17 year old beneficiaries earlier in this chapter.

8.4. Annual SAGES limits and SAGES grant room

8.4.1. Calculating SAGES grant room and carry forward

Promoters must use the following formula to calculate the amount of unused SAGES grant room that can be carried forward to the next year:

Carry forward formula

SAGES grant room to carry forward next year = SAGES grant room at the start of this year – SAGES amount paid this year

As stated earlier, SAGES grant room can carry forward from previous years. Therefore, new RESP contributions may qualify for more than the $250 amount that is added to the SAGES grant room per beneficiary each year.

Subscribers can catch up on unused SAGES grant room in these situations by making more than $2,500 in RESP contributions each year. However, SAGES payments are limited to an annual amount of $500 per beneficiary across all RESPs in which a beneficiary is named.

8.4.1.1. Example of calculating SAGES grant room and carry forward

Jonathan was eligible to receive SAGES in 2013. However, his parents did not open his individual RESP until 2016 when he was 12 years old. They were able to catch up on 4 years of unused SAGES grant room by the time Jonathan turned 13. They did so by making at least $5,000 in annual contributions each year, as illustrated in the following table. Jonathan was not a beneficiary in any other RESP. Therefore, it makes it possible to calculate unused SAGES amounts to carry forward based only on the contributions made for him in this RESP.

8.4.2. SAGES grant room and beneficiary residency requirements

SAGES grant room can accumulate even when a beneficiary is not a resident of Saskatchewan. However, promoters can request SAGES on a contribution only if the beneficiary was a resident of Saskatchewan when the subscriber made the contribution.

Subscribers are responsible for informing their promoters about changes to beneficiary residency status. Consequently, promoters must cease to request new SAGES payments for a beneficiary when a subscriber informs them of a residency change.

8.5. Lifetime SAGES limits

8.5.1. SAGES amounts in educational assistance payments (EAPs)

Each beneficiary can attract up to the maximum lifetime SAGES limit of $4,500. This limit applies to the total amount of SAGES paid in respect of the beneficiary into all RESPs in which the beneficiary is named.

Every beneficiary named in a family RESP has access to the full SAGES amount in the plan. This is true even if some SAGES amounts paid (or transferred) into the plan were originally paid in respect of other beneficiaries. Consequently, beneficiaries may receive more than $4,500 of accumulated SAGES amounts in their EAPs throughout their post‑secondary studies. For more information, refer to 8.7.2. Sharing SAGES and earnings.

8.5.1.1. Example of SAGES amounts in EAPs

Sandra is a beneficiary in the following RESPs:

• family RESP with promoter A
• individual RESP with promoter B

Sandra is not limited in the amount of SAGES she can receive in EAPs throughout her post‑secondary studies. She can even use SAGES amounts that were originally paid into the family RESP in respect of her siblings.

8.6. Applying for SAGES

8.6.1. The application process – SAGES

The promoter facilitates SAGES applications by:

• establishing and requesting registration of the education savings plans (ESPs) initiated by subscribers
• helping subscribers identify incentives for which beneficiaries qualify by providing and explaining eligibility criteria, and
• assisting subscribers to complete the SAGES application form (ESDC SDE 0093‑C, ANNEX C ‑ SAGES)

Note: The promoter must be authorized to offer SAGES.

The following steps are required to receive SAGES payments in an RESP:

1. the subscriber approaches a promoter that is authorized to offer SAGES, to open and register an ESP and name a beneficiary
2. the promoter obtains the Social Insurance Numbers (SINs) for the subscriber and the beneficiary and establishes the ESP

3. the promoter reviews eligibility criteria with the subscriber to identify whether the beneficiary qualifies for SAGES. For more information, refer to 8.2. Eligibility criteria
4. the promoter completes the SAGES application form with the subscriber and obtains the necessary information and signatures

5. the subscriber deposits contribution(s) to the RESP. Special conditions apply when a beneficiary is 16 and 17 years old. For more information, refer to 8.2.3. Contributions for 16 and 17 year old beneficiaries

6. the promoter processes the application form according to established procedures

Promoters can also use the optional 8.6.2. Post‑application checklist to provide subscribers with helpful reminders.

8.6.2. Post‑application checklist

• Remind subscribers that no SAGES payments will be made as of January 1, 2018

Promoters may continue submitting SAGES requests after that date but the CESP system will not pay SAGES. Promoters will receive a refusal reason “9” (other) on SAGES requests made after December 31, 2017.

• Confirm that all information is accurate onto the SAGES application form

Accurate information ensures timely SAGES payments. Inaccurate information may delay payments.

• Remind subscribers of the $50,000 lifetime contribution limit per beneficiary. Inform them of the need to coordinate contributions if they are aware of other RESPs that are open for the beneficiary

This may avoid potential penalty taxes due to over‑contributions.

• Remind subscribers that the CESP system may receive multiple SAGES requests in respect of the beneficiary. The beneficiary could have multiple RESPs

If the CESP system receives 2 (or more) SAGES requests for the same beneficiary, SAGES will be paid to the first request submitted and successfully processed by the CESP system.

For more information, refer to 8.7.1. Order of payments.

• If a subscriber is not the beneficiary’s parent or legal guardian, advise the subscriber that the promoter must notify the parent or legal guardian within 90 days that an ESP has been established
• Advise subscribers that the promoter will notify them once CRA confirms the registration of the ESP
• Advise subscribers that the promoter will notify them when they receive SAGES payments

8.6.3. Requesting SAGES payments for RESP contributions

Promoters report each RESP contribution to the CESP system in an electronic record “400‑11”. To request a SAGES payment for one of these contributions, they must also submit a SAGES request record “410‑30”. In that transaction, they will identify the corresponding contribution.

For more information, refer to the CESP Interface Transaction Standards on the Systems Documentation tab of the webpage Canada.ca/RESPresources.

8.6.4. Application for SAGES following transfer from non‑offering promoters

Sometimes, subscribers can transfer an RESP accounts from a non‑offering promoter to a SAGES offering promoter. Once the transfer is complete, they can request SAGES in respect of the contributions made at the SAGES non‑offering RESP promoter.

In order to do so, the application for SAGES following the transfer will be made through a manual intervention, processed by ESDC. The first step is to submit a SAGES request on new contributions made to the new RESP. Then, the promoter will send the transaction to ESDC through the regular monthly transaction process. Once the CESP system processes the request successfully, the SAGES offering promoter can apply for the SAGES on eligible contributions made with the non‑offering promoter.

Following the announcement of the SAGES suspension beginning January 1, 2018, the last day to submit requests for SAGES for transferred contributions from a non‑offering promoter will be September 30, 2017. Any request received after September 30, 2017, will not be actioned.

The following steps are required to apply for SAGES in respect of contributions made with the non‑offering promoter:

1. the subscriber requests a transfer of the RESP assets from the SAGES non‑offering promoter to the SAGES offering promoter
2. the subscriber and the promoters take the necessary steps to ensure that they successfully process the transfer. For more information, refer to Chapter 9. Registered Education Savings Plan transfers and education saving incentives
3. the receiving promoter reviews the eligibility criteria to ensure the beneficiary qualifies for SAGES. They must then complete the SAGES application form (ESDC SDE 0093‑C, ANNEX C ‑ SAGES) with the subscriber. For more information, refer to 8.2. Eligibility criteria

4. the subscriber makes a new contribution to the RESP (with the receiving promoter offering SAGES) in respect of the beneficiary
5. the receiving promoter submits SAGES request on a new contribution via an electronic transaction to ESDC. For more information, refer to 8.6.3. Requesting SAGES payments for RESP contributions

6. ESDC processes SAGES request on the new contribution
7. the receiving promoter sends an email to ESDC. They will request SAGES on the transferred eligible contributions from the non‑offering promoter. This is done once the request for SAGES is successfully processed (transaction processing report – record type 910). This includes:
   • the beneficiary’s first name
   • last name
   • the SAGES offering promoter’s contract number associated to the beneficiary (15 digits), and
   • the date that the beneficiary started to be a resident of Saskatchewan as it appears on the SAGES application form (ESDC SDE 0093‑C, ANNEX C ‑ SAGES)
8. ESDC receives the email from the SAGES offering promoter, validates eligible transferred contributions and proceeds with a manual intervention. Following the manual intervention, ESDC will send the transaction identification number and the amount paid to the promoter by email. The CESP system pays the SAGES amount to the promoter. At the end of each processing period, ESDC sends a transaction processing report (a record type “910”) to the sender for every successfully processed transaction. For more information, refer to the CESP Interface Transaction Standards on the Systems Documentation tab of the webpage Canada.ca/RESPresources
9. the promoter receives and deposits the SAGES payment into the RESP in respect of the beneficiary. They will then notify the subscriber that the SAGES payment has been deposited into the RESP via account statements

8.7. Receiving and depositing SAGES

ESDC sends a record “910” in the monthly transaction processing report to each promoter to acknowledge the successful processing of each SAGES request. This report indicates:

• the SAGES amount paid on successful requests, and
• refusal reasons if the CESP system did not pay the full SAGES amount
• For more information, refer to 8.7.3. Reasons for non‑payment of SAGES

Once ESDC sends SAGES payments to promoters, the promoter must:

1. deposit each SAGES payment into the appropriate RESP account in respect of each beneficiary

The promoter tracks and manages all RESP transactions using various RESP accounts. The promoter must update the SAGES account for each SAGES payment made to an RESP.

2. notify the subscriber (via account statements) about all SAGES amounts deposited into the RESP

8.7.1. Order of payments

Since a child can be a beneficiary of more than one RESP, the CESP system responds to SAGES requests on a first‑come, first‑served basis.

8.7.1.1. Example of order of payments

Erin is a beneficiary in 2 individual RESPs. One RESP is with promoter A and the other is with promoter B. Erin had $150 in SAGES grant room available before the following transactions were submitted for processing in April 2014.

Promoter A:

• contribution transaction:
  • a $1,000 contribution was made for Erin on March 3, 2014
• SAGES request:
  • a SAGES request was made for this contribution on March 3, 2014

Promoter B:

• contribution transaction:
  • a $1,000 contribution was made for Erin on March 10, 2014
• SAGES request:
  • a SAGES request was made for this contribution on March 10, 2014

Both SAGES requests were processed for the same beneficiary in the same processing month. Therefore, the CESP system will process the SAGES request with the earliest transaction date first. In this example the promoter A SAGES request will be processed before the promoter B SAGES request.

Promoter A would receive a $100 SAGES payment, the full 10% SAGES amount on the $1,000 contribution. This would reduce Erin’s SAGES grant room from $150 to $50.

The other SAGES request made by promoter B would receive a SAGES payment of only $50. This equals to the remaining amount available in Erin’s SAGES grant room at that time. The full SAGES amount (10% of $1,000) was no paid for this contribution at promoter B. In this case, promoter B will receive a refusal reason 1 (annual limit exceeded) for this SAGES request in their transaction processing report.

8.7.2. Sharing SAGES and earnings

All beneficiaries named in an RESP can share the SAGES and RESP earnings in EAPs if they satisfy EAP eligibility criteria. For more information, refer to 8.5.1. SAGES amounts in educational assistance payments (EAPs).

8.7.2.1. Family RESPs

All SAGES payments made in a family RESP are pooled together in one SAGES account. If a beneficiary named in a family RESP is eligible to receive an EAP, this SAGES account is available to that beneficiary. Furthermore, any earnings generated by SAGES can also be shared in an EAP for any eligible beneficiary named in the RESP. This applies as well to earnings generated by any other component of the RESP.

8.7.3. Reasons for non‑payment of SAGES

To ensure timely SAGES payments into RESPs in respect of eligible beneficiaries, the promoter must:

• help subscribers to accurately complete the SAGES application form, and
• submit information collected on these forms, along with other required data, to ESDC via electronic transactions. These transactions must pass all formatting and business rule validation according to the CESP Interface Transaction Standards (ITS)

For more information about the types of transactions and reports exchanged between promoters and the CESP system, refer to Chapter 3. The Canada Education Savings Program system and Interface Transaction Standards.

8.7.3.1. When transactions are rejected

The CESP system rejects promoter transactions that contain errors and generates corresponding error codes in a monthly transaction error report (record type “800”). The CESP system sends those reports electronically to each promoter’s head office. Promoters are responsible for correcting any errors and resubmitting corrected transactions to the CESP system.

Transaction error reports identify SAGES requests that were rejected due to either missing information or a failure to pass formatting and business rules.

For more information, refer to Appendix E. Understanding error codes.

8.7.3.2. When payments are refused

The CESP system sends a monthly transaction processing report to each promoter’s head office. This report acknowledges receipt of all processed transactions, including processed SAGES requests (record type “910”). This report would indicate the amounts paid for all successful SAGES requests. It would also identify any SAGES requests for which payment was refused (or the full SAGES amount was not paid).

The CESP system refuses SAGES requests if they do not comply with business rules. For example, once the annual SAGES limit has been reached in respect of a particular beneficiary, any additional SAGES requests for the beneficiary in the same year would be processed, but the corresponding SAGES payments would be refused. For more information, refer to 8.4. Annual SAGES limits and SAGES grant room.

For more information, refer to Appendix F. Understanding refusal reasons.

8.7.4. Time constraints for SAGES payments

SAGES requests may be refused due to time constraints and receive one of the following refusal reasons:

• refusal reason D (late transaction)
• refusal reason O (late SAGES request)
• refusal reason 9 (other)

The CESP system uses SAGES request “410‑30” transaction dates to generate these 3 refusal reasons. Promoters must use the most recent of the following dates to determine the transaction date of a SAGES request:

• the date that the subscriber completes a SAGES application form, or
• the date that the subscriber makes the corresponding contribution

8.7.4.1. Refusal reason D (late transaction)

Promoters could submit incorrect information or make formatting errors in their SAGES request transactions “410‑30”. When that happens, they must correct and resubmit those transactions to the CESP system in another file. If they send a file that is more than 3 years after the original transaction date of a SAGES request in the file:

• the SAGES transaction will be processed by the CESP system
• SAGES will not be paid on the associated contribution, and
• the promoter will receive a refusal reason D (late transaction) in a record type “910” of their transaction processing report

8.7.4.2. Refusal reason O (late SAGES request)

Subscribers have up to 3 years after the date of a contribution to apply for a SAGES payment “410‑30” on the contribution “400‑11”. If this condition is not met:

• the SAGES transaction will be processed by the CESP system
• SAGES will not be paid on the contribution, and
• the promoter will receive a refusal reason O (late SAGES request) in a record type “910” of their transaction processing report

8.7.4.3. Refusal reason 9 (other)

As of January 1, 2018, subscribers and promoters no longer have up to 3 years to request SAGES on eligible contributions. This is applicable for the duration of the SAGES suspension. Retroactive SAGES requests must have a transaction date no later than December 31, 2017. Promoters also had to submit the transactions to the CESP system for processing by 5 pm, Easter time on January 5, 2018. Any SAGES request that the CESP system receives after December 31, 2017, will receive a refusal reason 9.

8.8. Repaying SAGES

SAGES must be repaid to ESDC as a result of:

• a withdrawal of contributions (most common repayment reason), or
• other repayment circumstances

The type of circumstance determines the method used to calculate the SAGES amount to be repaid.

8.8.1. The repayment process

The promoter must:

1. recognize and identify circumstances that require SAGES repayments
2. determine SAGES amounts to repay, and
3. submit the required financial transaction(s) to the CESP, indicating the amounts and repayment reasons. For more information, refer to 8.8.4. Submitting repayment information to the CESP system

Promoters initiate a SAGES repayment from an RESP. They do so by submitting a transaction to ESDC indicating the amount of SAGES to repay and the repayment reason. ESDC makes monthly direct deposits for each promoter. They will include all incentive payments made for all successfully processed transactions submitted by the promoter in the previous month. The CESP system will subtract all repayment amounts for the previous month from the amount that would normally be paid to promoters in their next direct deposit.

8.8.2. SAGES repayments on contribution withdrawals

SAGES encourages families to save for their child’s post‑secondary education. Specific rules discourage subscribers from withdrawing their contributions until beneficiaries enroll in post‑secondary education.
A subscriber can withdraw RESP contributions, without having to repay SAGES, only if:

• a beneficiary of the RESP is eligible to receive an EAP, or
• the withdrawal is to correct an RESP over‑contribution and the amount of the RESP over‑contribution for this beneficiary, across all RESPs, is $4,000 or less at the time of the withdrawal

In any other instance, the withdrawal of RESP contributions requires a SAGES repayment.

8.8.2.1. Calculating SAGES repayments for contribution withdrawals

When a promoter must repay SAGES from an RESP due to a withdrawal of RESP contributions, the promoter must repay the lesser of the following amounts:

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

8.8.2.2. Waiver of repayment

A subscriber could face undue hardship if repayment of the SAGES is required due to the withdrawal of contributions. As per section 8of the Saskatchewan Advantage Grant for Education Savings Regulations, the Minister of Advanced Education may waive the requirement for repayment of SAGES to avoid undue hardship.

Examples of undue hardship include:

• an extraordinary event that led to bankruptcy or financial hardship
• an extraordinary illness – a severe illness requiring prolonged hospitalization or recovery. The illness would create an undue hardship due to expenses related to:
  • specialized medical equipment
  • travel for out‑of‑province/country medical emergency, and/or
  • medications
• a catastrophic event – uninsured damage to property by an unforeseen event, and
• other situations that may be deemed as an acceptable undue hardship as determined by the Minister of Advanced Education

To request a waiver of repayment of SAGES, the subscriber must complete and submit the Saskatchewan Advantage Grant for Education Savings Waiver of Repayment form. It must be for an existing RESP and they must submit it to the Saskatchewan Ministry of Advanced Education within 12 months of the RESP contribution withdrawal transaction date.

The ministerial review process is as follows:

1. the subscriber initiates the withdrawal of contributions
2. the promoter processes the contribution withdrawal and repayment and downloads the Saskatchewan Advantage Grant for Education Savings Waiver of Repayment form from the Forms tab on Canada.ca/RESPresources webpage and provides a copy to the subscriber. For more information, refer to 8.8.2. SAGES repayments on contribution withdrawals
3. the subscriber completes the form, attaches supporting documentation for the waiver (original or copies of documentation accepted), and send them by mail to:

Ministry of Advanced Education
Student Service and Program Development Branch
1120‑2010 12th Avenue
Regina SK S4P 0M3
Telephone: 1‑800‑597‑8278

4. the Ministry of Advanced Education analyses the request, informs the subscriber in writing of the decision. Note: If the request for the SAGES waiver of repayment is denied, no further action is required
5. the subscriber should the request receives a favourable review, the subscriber is required to provide the RESP promoter with the approval documentation
6. the promoter submits a reversal of the SAGES repayment transaction followed by a new SAGES repayment transaction “400‑21” – repayment reason “01” – contribution withdrawal). The repayment amount is set to 0 for SAGES. They then deposit the SAGES payment into the RESP in respect of the beneficiary. They will keep a copy of the Saskatchewan approval documentation

8.8.3. Other repayment circumstances

In addition to the withdrawal of contributions, there are a number of other circumstances in which SAGES must be repaid.

The promoter must also repay the SAGES in an RESP when:

• the promoter terminates the RESP
• the CRA revokes the registration for the RESP
• the promoter makes an accumulated income payment (AIP)
• the promoter makes a payment to a designated educational institution
• the promoter makes an EAP to an individual who is not a beneficiary under the RESP
• an ineligible transfer occurs, or
• an ineligible beneficiary replacement occurs

8.8.3.1. Calculating the repayment amount – Other circumstances

If the promoter repays SAGES from an RESP for any of the above reasons, the amount to repay is equal to the lesser of:

• the total in the SAGES account immediately before the occurrence, and
• the fair market value of the property held in the RESP, immediately before the occurrence

8.8.4. Submitting repayment information to the CESP system

Financial transactions (record type “400”) are used to record the movement of funds into or out of the RESP, with the exception of earnings. A SAGES repayment or the repayment of other incentive administered by ESDC is considered to be a financial transaction.

When submitting SAGES repayment information to the CESP system, the promoter will submit the following transaction to the CESP system:

• record type “400”, transaction type “21” (grant repayment)

In addition, the transaction will identify the SAGES repayment reason (or flag), with one of the following codes:

• 01: Contribution withdrawal
• 02: Accumulated income payment (AIP)
• 03: Contract termination
• 04: Ineligible transfer
• 05: Ineligible beneficiary replacement
• 06: Payment to educational institution
• 07: Revocation (of plan)
• 10: Over‑contribution withdrawal
• 11: Other
• 12: Non‑resident

In all repayment transactions, promoters must also report the amount of SAGES they are repaying to ESDC. For more detailed information about how transactions are processed between the promoter and the CESP system, refer to Chapter 3. The Canada Education Savings Program system and Interface Transaction Standards.

8.8.5. How funds are used to repay SAGES

When processing a repayment, promoters must take into consideration whether or not there are sufficient funds in the RESP at the time repayment is required.

8.8.5.1. When sufficient funds exist in the RESP and the plan is terminated

If there are sufficient funds in the RESP, the promoter will repay the SAGES and any other incentives from the corresponding RESP account(s).

Example of when sufficient funds exist in the RESP and the plan is terminated

A subscriber terminated an individual RESP with the following account balances because the beneficiary will never be eligible for an EAP. The promoter must repay all incentives because they are terminating the plan.

RESP Market Value: $27,575
Earnings: $9,375
Contributions: $14,000
SAGES: $1,400
CESG: $2,800
SAGES repayable = $1,400
CESG repayable = $2,800
Total repayable = $4,200

In this example, the promoter would withdraw the funds from the RESP and submit the following grant repayment transaction (400‑21) to the CESP system.
“400‑21” (03) Reason code = 03 (Contract termination), $1,400 in the SAGES amount field, $2,800 in the CESG amount field.

8.8.5.2. When insufficient funds exist in the RESP and the plan is terminated

When the promoter terminates the RESP, they must repay the SAGES and any other federal and provincial education savings incentives in the plan.

The RESP could have experienced a loss and there could be insufficient funds to cover the total SAGES amount repayable. In that case, the promoter must submit a Termination Adjustment Transaction to the CESP system to report the shortfall.

Losses are first attributed to earnings, and then to contributions. Once these notional accounts are depleted, any remaining losses are apportioned equally across the federal and provincial education savings incentives that are remaining in the RESP.

Promoters must use a repayment formula for 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

Example of when insufficient funds exist in the RESP and the promoter terminates the plan

A subscriber terminated an individual RESP because the beneficiary will never be eligible for an EAP. The promoter must repay all the federal and provincial incentives proportionally as a result of the plan’s termination and loss resulting in insufficient funds to cover the total amount of incentives repayable.

RESP market value: $4,000
Earnings: $0
Contributions: $14,000
SAGES: $1,400
CESG: $2,800

In this example, the total amount of incentives that would normally be repayable ($1,400 + $2,800 = $4,200) exceeds the fair market value of the RESP ($4,000).

Therefore, the following calculations are required to determine the actual repayable amount for each incentive.

Based on the federal education savings incentives repayment formula, the RESP promoter must repay $2,666.67 of CESG.

Calculation: Amount of the CESG to be repaid to ESDC
($4,000 × $2,800) / ($2,800 + $1,400) = $2,666.67
The remaining $1,333.33 is the amount of SAGES to be repaid to ESDC.
Calculation: Amount of the SAGES to be repaid to ESDC
$4,000 – $2,666.67 = $1,333.33
SAGES repayable = $1,333.33
CESG repayable = $2,666.67
Total repayable = $4,000

In this example, the promoter would withdraw the funds from the RESP and submit the following grant repayment transaction (400‑21) to the CESP system.

400‑21 (03) Repayment reason code = 03 (contract termination), $1,333.33 in the SAGES amount field, $2,666.67 in the CESG amount field.

Next, it will be necessary to determine the shortfall and submit the appropriate Termination Adjustment transaction to the CESP system. To determine the shortfall for each incentive, subtract the amount that can be paid from the incentive notional account balance. The following table shows the results of this calculation.

Shortfall termination adjustment: $200

The promoter must submit the following Termination Adjustment transaction (400‑22) to inform ESDC of the $200 shortfall.

400‑22 $66.67 in the SAGES amount field, $133.33 in the CESG amount field.

8.9. Other transactions involving SAGES

The subscriber could ask the promoter to handle other transactions involving SAGES. These include:

• transferring funds (including SAGES) from one RESP to another

For more information, refer to Chapter 9. Registered Education Savings Plan transfers and the education savings incentives.

• responding to a request for an EAP and calculating the SAGES portion of the EAP

For more information, refer to Chapter 10. Post‑secondary education and educational assistance payments.