CESP - RESP provider user guide Education savings incentives

Disclaimer: RESP promoters

The information contained on this page is technical in nature and is intended for Registered Education Savings Plan (RESP) and Canada Education Savings Program promoters. For general information, visit the RESP section.

Chapter 2-1: The Canada Education Savings Grant (CESG)

The Canada Education Savings Grant (CESG) is an education savings incentive administered by the Canada Education Savings Program (CESP), Employment and Social Development Canada (ESDC).

Registered Education Savings Plan (RESP) promoters must enter into an agreement with ESDC to offer the CESG or any other education savings incentive administered by ESDC.

The CESG is based on contributions made to an RESP in respect of an eligible beneficiary and is comprised of two components:

  • Basic CESG
  • Additional CESG

See Appendix C for a list of acronyms and terms used in this guide.

1. The Basic and Additional CESG – an overview

The CESG consists of:

  • a Basic CESG of 20% on the first $2,500 (or less) of contributions each year to an RESP is available to all eligible residents of Canada regardless of adjusted income; and
  • an Additional CESG which may be either 10% or 20% on the first $500 (or less) of contributions each year, depending on adjusted income (see 2. Eligibility criteria).

The CESG is available for contributions made until the end of the calendar year in which the beneficiary turns 17. The total combined amount of the CESG paid into all RESPs in respect of a specific beneficiary cannot exceed the CESG lifetime limit of $7,200.

1.1. How it works

The payment of the CESG is based on the following requirements:

  • An RESP . A subscriber must meet with a participating RESP promoter, open an RESP, and name an eligible beneficiary.
  • Eligibility criteria. The subscriber and participating RESP promoter ensure that all eligibility criteria for the CESG have been met.
  • Application process. The subscriber requests a participating RESP promoter to request for the CESG on their behalf. See 6. Applying for the Basic and Additional CESG.
  • RESP contributions. The subscriber makes contributions to the RESP which may attract CESG payments into the RESP.

2. Eligibility criteria

To determine if a contribution is eligible for the CESG, the following eligibility criteria should be considered:

2.1. Basic CESG

  • Does the beneficiary have a valid Social Insurance Number (SIN)?
  • Has the subscriber established and registered an Education Savings Plan (ESP) with an RESP promoter and named a beneficiary?
  • Was the beneficiary a Canadian resident at the time the contribution was made?
  • Was the contribution made prior to the end of the calendar year in which the beneficiary turned 17?
  • Has one of the following two conditions been met if the contribution was made during the calendar year that a beneficiary turned 16 or 17 years old?
    • A minimum of $100 in annual RESP contributions has been made in each of any four years (consecutive or not and not withdrawn) before the end of the calendar year the beneficiary turned 15.
      • A minimum of $2,000 in RESP contributions has been made (and not withdrawn) before the end of the calendar year the beneficiary turned 15.

        OR

        A minimum of $2,000 in RESP contributions has been made (and not withdrawn) before the end of the calendar year the beneficiary turned 15.

If all of the questions to this point have been answered in the affirmative, the contribution may be eligible for the Basic CESG .

2.2. Additional CESG

  • Is the RESP an individual (non-family) plan or a family plan in which all beneficiaries are siblings?
  • Was the contribution made to the RESP on or after January 1, 2005?
  • Has the required information been provided? See 2.6. Information required to request the Additional CESG.
  • Is the beneficiary’s individual primary caregiver (PCG) eligible to receive the Canada child benefit (CCB)?
  • Is the beneficiary a dependant of an individual PCG whose adjusted income is greater than $47,630 but less than or equal to $95,259? Footnote 2

If all of the questions to this point have been answered in the affirmative, the contribution may be eligible for both the Basic CESG and the 10% Additional CESG.

  • Is the beneficiary a dependent of an individual PCG whose adjusted income is less than or equal to $47,630? Footnote 2 , or a dependent of a public PCG receiving payments under the Children’s Special Allowances Act (CSAA) for the beneficiary?

If all of the questions to this point have been answered in the affirmative, the contribution may be eligible for both the Basic CESG and the 20% Additional CESG.

2.3. Types of RESPs for the CESG

The Basic CESG rate of 20% is payable on all eligible contributions made to an RESP recognized by the Income Tax Act (ITA).

The Additional CESG rates of 10% or 20% are payable only into the following types of RESPs:

  • an individual (non-family) plan

    OR

  • a family plan in which all beneficiaries are siblings

2.4. Contributions to an RESP and the CESG eligibility

Payment of the CESG is based on contributions deposited to an RESP and is subject to annual and lifetime limits. For more information, see 3. Annual CESG limits and grant room.

To qualify for the CESG, a contribution must be made to an RESP in respect of an eligible beneficiary who is:

  • named under the RESP; and
  • a resident of Canada at the time of the contribution.

Contributions to an RESP are considered to be “assisted” or “unassisted” in respect of the CESG:

  • Assisted contributions attract the CESG payments.
  • Unassisted contributions do not attract the CESG payments.

Consequences of withdrawing assisted contributions

The withdrawal of assisted contributions from the RESP may trigger a repayment of the CESG and may affect grant eligibility. See 8. Repaying the CESG.

As of 1998, the CESG has been available on contributions made in respect of all eligible beneficiaries starting from the year they are born, until the end of the calendar year in which they turn 17.

Examples: Contributions and the CESG age limit

Janet turns 17 on December 15, 2018. She is only eligible to receive the CESG for two more weeks in that year – until December 31, 2018.

Mary turns 17 on January 23, 2018. She can receive the CESG for the rest of that year – until December 31, 2018.

2.5. Contributions for 16 and 17 year-old beneficiaries

Special conditions apply for the contributions made during the calendar years in which a beneficiary turns 16 and 17 years old. For those contributions to be eligible for the CESG, one of the following conditions must apply:

  • a minimum of $100 in annual RESP contributions, in respect of the beneficiary, must have been made in any four years (consecutive or not and not withdrawn) before the end of the calendar year the beneficiary turned 15;

    OR

  • a minimum of $2,000 in RESP contributions, in respect of the beneficiary, must have been made (and not withdrawn) before the end of the calendar year the beneficiary turned 15.

2.6. Information required to request the Additional CESG

The CESP system requires the PCG information, (or that of the individual PCGs cohabiting spouse or common-law partner, if applicable), to verify a beneficiary’s eligibility for the Additional CESG with the Canada Revenue Agency (CRA).

Promoters must submit a contribution transaction to the CESP system to request the CESG for that contribution. When a contribution transaction includes information about the PCG (or the individual PCGs cohabiting spouse or common-law partner, if applicable), the CESP system uses that information to validate the beneficiary’s eligibility for the Additional CESG on that contribution.

2.6.1. Individual PCG

A person is the individual PCG of a beneficiary if they are eligible to receive the Canada child benefit (CCB) for the beneficiary. A beneficiary could have more than one individual PCG if two people, who do not live together, share custody of the beneficiary. For more information, see 2.7 Shared custody.

The CCB is a tax-free monthly payment made to eligible families to help them with the cost of raising children under the age of 18. To be eligible to receive the CCB, it is necessary to complete an application form with the CRA. This form, plus additional information, is available at the CRA. Contact any local Tax Services Office, or call toll-free at 1-800-959-8281.

An individual PCG or, as of 2018, their cohabiting spouse or common-law partner, if applicable, must provide their name and SIN on the CESP application form to request the Additional CESG. The individual PCG’s adjusted income is used, in part, to validate eligibility for the Additional CESG.

The CRA calculates a PCG’s adjusted income using, in part, the net income reported on line 236 of tax returns filed by the PCG, and that of their cohabiting spouse or common-law partner, if applicable.

2.6.2. Public PCG

An organization is the public PCG of a beneficiary if it is entitled to receive payments for the beneficiary under the CSAA.

The Children’s Special Allowance is a tax-free monthly payment for a child who is under the age of 18, who physically resides in Canada, and who is under the care of an agency.

A public PCG must provide their business number (BN) to request the Additional CESG. To be eligible for the 20% Additional CESG rate, the CRA verifies that the public PCG is entitled to payments for the beneficiary under the CSAA.

2.7. Shared custody

If a beneficiary is cared for by an individual PCG and their cohabiting spouse or common-law partner, if applicable, only one person would be eligible to receive the CCB for that beneficiary at any given time.

However, if two individuals do not live together, but care for and share the custody of the beneficiary, they may share the CCB payments in respect of the beneficiary. In these situations, they both may be an individual PCG of the beneficiary at the same time.

Example: Shared custody

Robert and Sarah decided to live separately and agreed to share custody of their child, Natasha. As both Robert and Sarah applied for and receive their share of Natasha’s CCB payments, they are both an individual PCG for Natasha.

Robert and Sarah each opened their own individual RESP for Natasha. They also both requested the Additional CESG to be paid into their RESPs and provided the required information on the CESP application form.

RESP for Natasha Individual PCG recognized by the CRA for Natasha Individual PCG named on the Additional CESG requests
RESP A Robert and Sarah Robert
RESP B Robert and Sarah Sarah

In this example, all contributions to RESP “A” could be submitted to the CESP system with Robert’s SIN as the individual PCG (or the SIN of his cohabiting spouse or common-law partner, if applicable).

Similarly, all contributions to RESP “B” could be submitted to the CESP system with Sarah’s SIN as the individual PCG (or the SIN of her cohabiting spouse or common-law partner, if applicable).

The CESP system would validate Natasha’s Additional CESG eligibility using the SIN of the PCG (or their cohabiting spouse or common-law partner, if applicable) that is submitted to the CESP system with each contribution transaction.

2.8. Tax year used to validate eligibility for the Additional CESG

Income amounts from the most recent tax information are used to determine eligibility for the Additional CESG.

The CESP system uses income reported for one tax year to validate the Additional CESG eligibility for all contributions made in a calendar year in respect of a beneficiary. On January 1 of each year, the CESP system re-examines the Additional CESG eligibility of existing beneficiaries for that calendar year. At the beginning of a calendar year, the most recent income reported to the CRA is normally from two years in the past. For example, on January 1, 2018, the most recent income on file at the CRA would be the income from 2016 which was reported to the CRA in 2017.

Exception

If the initial Additional CESG request made for a beneficiary, for whom the CCB is paid to an individual PCG for the first time between July 1 and December 31, eligibility (for that calendar year only) may be validated using income on file from the previous calendar year.

3. Annual CESG limits and grant room

From 1998 to 2006, $400 was added annually to the grant room (unused Basic CESG amounts) of each eligible beneficiary. As of 2007, $500 is added annually to the grant room of each eligible beneficiary.

Grant room can accumulate until the end of the calendar year in which the child turns 17, even if the child is not named as a beneficiary in an RESP.

Period Annual amount added to Basic CESG grant room per beneficiary
1998 to 2006 $400
Since 2007 $500

The amount of grant room carried forward will affect the maximum amount of Basic CESG that can be paid for a beneficiary in a single calendar year, provided sufficient contributions are made to the RESP.

If a beneficiary is eligible for the Additional CESG in a particular year, an RESP contribution must be made in the name of the beneficiary during that year to attract the Additional CESG. Unused entitlements to the Additional CESG cannot be carried forward for use in future years.

The CESG is paid on contributions made to an RESP in the name of a beneficiary. Eligible children can benefit from grant room only if they are beneficiaries of an RESP.

If all contributions made across all RESPs in respect of a beneficiary are insufficient to receive the full amount added to the grant room each year for the beneficiary, the difference (unused Basic CESG amounts) can be carried forward and added to the accumulated grant room for use in future years. This allows subscribers to potentially catch up on the unused Basic CESG amounts.

The following tables and examples illustrate how the Basic CESG and the Additional CESG are calculated. They also describe the annual limit of the corresponding CESG.

The Basic CESG
Period The Basic CESG annual limit Contribution required for the Basic CESG annual limit
1998 to 2006 $800 (20% of $4,000) $4,000
Since 2007 $1,000 (20% of $5,000) $5,000
The Additional CESG
Individual PCG’s adjusted income
(2018 income levels; indexed annually)
The Additional CESG annual limit
Less than or equal to $47,630 $100 (20% of $500)
Greater than $47,630 but less than or equal to $95,259 $50 (10% of $500)
More than $95,259 0

Example: The annual Basic CESG limit and grant room

If $1,000 of grant room has accumulated due to unused Basic CESG amounts being carried forward, an RESP could receive a total of $1,000 of Basic CESG in one year from a $5,000 RESP contribution made in respect of the beneficiary.

In this scenario, the entire $5,000 of contributions would be eligible for a 20% payment of the Basic CESG, allowing the subscriber to catch up on the beneficiary’s grant room that had been carried forward. The full $5, 000 would be an assisted contribution.

Example: The annual Additional CESG limit and grant room

If the beneficiary is eligible to receive the 10% Additional CESG on the first $500 of contributions, $50 ($500 x 10%) of the Additional CESG would be paid over and above the $1,000 of the Basic CESG shown in the previous example. This means the total CESG limit for that year would be $1,050.

If the beneficiary is eligible to receive the 20% Additional CESG on the first $500 of contributions, $100 ($500 x 20%) of the Additional CESG would be paid over and above the $1,000 of the Basic CESG shown in the previous example. This means the total CESG limit for that year would be $1,100.

Annual maximum amounts per beneficiary
Time Period Description Amount
RESP Contribution limits: 1998 to 2006: N/A $4,000
Since 2007: N/A No annual limit
Basic CESG:

1998 to 2006:

Annual amount added to grant room

$400

Basic CESG annual limit

$800

Since 2007:

Annual amount added to grant room

$500

Basic CESG annual limit $1,000
Additional CESG: Since 2005:

Yearly maximum Additional CESG (10% or 20% on the first $500 of contributions)

+ $100 OR

+ $50

Total CESG: (Basic + Additional)

2005 to 2006:

Yearly maximum payable with carry forward

$900

Since 2007:

Yearly maximum payable with carry forward

$1,100

3.1. Grant room and beneficiary residency

When a family moves out of Canada, they may not be considered residents of Canada, for tax purposes, during the time that they are out of the country. In these situations, the children would not accumulate grant room.

Subscribers are responsible for informing their RESP promoter of changes in beneficiary residency status. In turn, the RESP promoter must not accept RESP contributions nor request the CESG if the beneficiary does not meet residency requirements.

If parents of beneficiaries are with a diplomatic mission or in the Canadian Armed Forces, the beneficiaries may still be considered residents of Canada. In these situations, the beneficiaries would be eligible for the CESG and their grant room would continue to accumulate. To determine residency status, contact the CRA International Tax Services Office at 1-800-267-5177.

4. Lifetime CESG limits

The maximum lifetime CESG limit is $7,200 per beneficiary. The sum of the Basic and the Additional CESG payments cannot exceed this limit.

If a subscriber opens an RESP, names a child as the beneficiary at birth and deposits $2,000 annually until the end of the year in which this beneficiary turns 17, all of these contributions may be eligible for the maximum lifetime CESG of $7,200 assuming the beneficiary is only eligible for the Basic CESG.

Example: A beneficiary is only eligible for the Basic CESG

$2,000 x 18 years = $36,000 of contributions

$400 x 18 years = $7,200 of Basic CESG

When the beneficiary is eligible for the Additional CESG, the time and the amount of contributions required to reach the lifetime $7,200 CESG limit for the beneficiary would be reduced.

Example: A beneficiary is also eligible for the 20% Additional CESG

$2,000 x 14.4 years = $28,800 of contributions

$400 x 14.4 years = $5,760 of Basic CESG

$100 x 14.4 years = $1,440 of Additional CESG

Once the sum of all CESG payments in respect of a beneficiary (made to all RESPs in which the beneficiary is named) have reached the lifetime CESG limit of $7,200, additional contributions would no longer attract any CESG payments for that beneficiary.

5. Calculating the CESG

The Basic CESG and the Additional CESG are calculated independently.

5.1. Calculating the Basic CESG

The Basic CESG amount paid into an RESP is equal to 20% of the eligible contribution made to the RESP in respect of the beneficiary.

Calculating the Basic CESG

Eligible contribution x 20% = Basic CESG Amount

The amount of Basic CESG that can be paid each year in respect of a beneficiary is limited to the lesser of the following amounts:

  • the accumulated grant room available for the beneficiary
  • the Basic CESG annual limit
Period Basic CESG
annual limit
Contribution required for the
Basic CESG annual limit
1998 to 2006 $800 (20% of $4,000) $4,000
Since 2007 $1,000 (20% of $5,000) $5,000

See also 3. Annual CESG limits and grant room.

5.2. Calculating the Additional CESG

To calculate the Additional CESG, the CESP system must first determine if the beneficiary is eligible for the 10% or 20% Additional CESG rates. While an eligible beneficiary in care of a public PCG qualifies for the 20% rate, the rate for a beneficiary in care of an individual PCG depends on the adjusted income of the individual as shown in the following table:

Individual PCG adjusted income
(2018 income levels; indexed annually)
Additional CESG rate
Less than or equal to $47,630 20%
Greater than $47,630 but less than or equal to $95,259 10%
More than $93,208 Beneficiary is not eligible

The Additional CESG of 10% or 20% is paid on the first $500 (or less) of eligible contributions each year in respect of the beneficiary.

Calculating the Additional CESG

Eligible contribution x 10% or 20% = Additional CESG amount

See also 2.6 Information required to request the Additional CESG.

5.3. CESG calculation examples

The calculation of the CESG depends on a number of factors, such as:

  • the birth year of the beneficiary;
  • eligibility for the Additional CESG; and
  • the amount of unused Basic CESG amounts carried forward (grant room).
5.3.1. Basic and Additional CESG example with no carry forward

In the following example, the entire annual amount added to grant room is used every year which limits the eligible contributions for the Basic CESG to $2,000 (in 2005 and 2006) or $2,500 (in 2007). In this example, the beneficiary was also eligible for the 20% Additional CESG rate every year.

This example shows amounts for annual contributions and also lists the eligible contributions separately for the Basic CESG and the Additional CESG. These values are then used to calculate the amounts paid for the Basic CESG and the Additional CESG.

Year Age of beneficiary Annual amount added to grant room Annual contributions in respect of the beneficiary Eligible contributions* Basic CESG paid Additional CESG paid Total CESG paid
Basic CESG Additional CESG
2005 Born $400 $2,000 $2,000 $500 $400 $100 $500
2006 1 $400 $2,000 $2,000 $500 $400 $100 $500
2007 2 $500 $3,000 $2,500 $500 $500 $100 $600
Sub totals: $7,000 $6,500 $1,500 $1,300 $300 $1,600
Total in RESP: $8,600 ($7,000 Contributions + $1,600 CESG)

* Once eligible contributions have attracted grant, they become assisted contributions.

In this example, the CESG amount paid over the three years can be determined using the following calculations:

  • Basic CESG:
    $6,500 (eligible contributions) x 20% = $1,300
  • 20% Additional CESG:
    $1,500 (eligible contributions) x 20% $= 300
  • Total CESG (Basic + Additional):
    $1,300 (Basic CESG) + $300 (Additional CESG) = $1,600
5.3.2. Catching up on unused grant room – Basic CESG only

Consider the following example for a beneficiary who was born in 2005 but was never eligible for the Additional CESG.

The subscriber could catch up on four years of unused Basic CESG amounts (grant room) between 2005 and 2008, when contributions were not made, by making contributions each year that exceed $2,500 from 2009 to 2014. The child was named as a beneficiary in only one RESP.

Year Annual amount added to grant room Accumulated grant room RESP contributions Basic CESG paid to RESP CESG carry forward
2005 $400 $400
(0 + $400)
$0 $0 $400
2006 $400 $800
($400 + $400)
$0 $0 $800
2007 $500 $1,300
($800 + $500)
$0 $0 $1,300
2008 $500 $1,800
($1,300 + $500)
$0 $0 $1,800
Child's parents enter into an RESP in 2009 and name child as beneficiary
2009 $500 $2,300
($1,800 + $500)
$3,000
(Assisted)
$600 $1,700
($2,300 - $600)
2010 $500 $2,200
($1,700 + $500)
$3,000
(Assisted)
$600 $1,600
($2,200 - $600)
2011 $500 $2,100
($1,600 + $500)
$3,000
(Assisted)
$600 $1,500
($2,100 - $600)
2012 $500 $2,000
($1,500 + $500)
$5,000
(Assisted)
$1000 $1,000
($2,000 - $1000)
2013 $500 $1,500
($1000 + $500)
$5,000
(Assisted)
$1000 $500
($1,500 - $1000)
2014 $500 $1000
($500 + $500)
$5,000
(Assisted)
$1000 $0
($1000 - $1000)
2015 $500 $500
($0 + $500)
$2,500 (Assisted) $500 $0 ($500 - $500)
2016 $500 $500
($0 + $500)
$2,500 (Assisted) $500 $0 ($500 - $500)
5.3.3. Catching up on unused grant room – Basic and Additional CESG

The following example illustrates how a subscriber could catch up on unused Basic CESG amounts when the beneficiary is eligible for both the Basic CESG and the Additional CESG. The child was born in 2005 and was named as a beneficiary in only one RESP.

Table: Carry forward of Basic CESG - child born in 2005
Carry forward = accumulated grant room - Basic CESG paid
Year Amount added to grant room Accumulated grant room RESP contri-butions Adjusted income Basic CESG paid Additional CESG rate Additional CESG paid Carry forward
2005 $400 $400
($0 + $400)
$200 $32,000 $40 (20% x $200) 20% $40
(20% x $200)
$360
($400 - $40)
2006 $400 $760
($360 + $400)
$300 $31,000 $60 (20% x $300) 20% $60 (20% x $300) $700
($760 - $60)
2007 $500 $1,200
($700 + $500)
$400 $45,000 $80 (20% x $400) 10% $40 (10% x $400) $1,120
($1,200 - $80)
2008 $500 $1,620
($1,120 + $500)
$2,000 $52,000 $400 (20% x $2000) 10% $50 (10% x $500) $1,220
($1,620 - $400)
2009 $500 $1,720
($1,220 + $500)
$3,000 $91,000 $600
(20% x $3000)
N/A $0 $1,120
($1,720 - $600)
2010 $500 $1,620
($1,120 + $500)
$5,000 $93,000 $1,000
(20% x $5000)
N/A $0 $620
($1,620 - $1,000)
2011 $500 $1,120
($620 + $500)
$5,000 $95,000 $1,000
(20% x $5000)
N/A $0 $120
($1,120 - $1,000)
2012 $500 $620
($120 + $500)
$3,000 $98,000 $600
(20% x $3000)
N/A $0 $20
($620 - $600)
2013 $500 $520
($20 + $500)
$2,600 $99,000 $520
(20% x $2,600)
N/A $0 $0
($520 - $520)

Although the contributions made from 2005 to 2008 qualified for both the Basic and the Additional CESG amounts, the carry forward calculation is solely dependant on the Basic CESG amounts.

6. Applying for the Basic and the Additional CESG

The following illustration provides an overview of the application process for the Basic and Additional CESG.

  1. Establish the ESP; notify parent/legal guardian within 90 days.

    For the Additional CESG: Individual (non-family) plan or family plan with siblings only

    Information required:

    • Subscriber SIN
    • Beneficiary SIN
  2. Confirm eligibility criteria. Subscriber deposits contributions.

    Individual PCG (or their cohabiting spouse or common-law partner)
    • Name and /SIN
    • Public PCG
      Business number (BN)
  3. Complete and sign the CESP application form
  4. Submit Information to the CESP system/ request registration of ESP
  5. Electronic transaction
  6. The CESP system validates data; communicates with the CRA to request registration of the ESP
  7. The CESP system calculates and pays the CESG

6.1. The application process for the Basic and the Additional CESG

Who is involved

The process of applying for the Basic CESG and the Additional CESG includes the participation of the following individuals:

  • the RESP promoter
  • the subscriber(s)
  • the custodial parent or legal guardian
  • the PCG or, as of 2018, their cohabiting spouse or common-law partner if applicable (for the Additional CESG only)

The RESP promoter facilitates the application process by:

  • establishing and requesting registration of an education savings plan (ESP) (initiated by the subscriber);
  • confirming with the subscriber that the beneficiary qualifies for the CESG (either the Basic CESG or both the Basic and the Additional CESG) by discussing the eligibility criteria; and
  • assisting the subscriber to complete the appropriate application form.

The following provides a step-by-step overview of the application process:

Subscriber

Step 1

The subscriber approaches an RESP promoter authorized to offer the Basic CESG and the Additional CESG with the intent of opening and registering an ESP and naming a beneficiary.

Role: RESP promoter

Step 2

The RESP promoter establishes the ESP, making sure to obtain the SIN for:

  • the subscriber; and
  • the beneficiary.

Note: If the subscriber is applying for the Additional CESG, the plan must be an individual (non-family) plan or a family plan in which all beneficiaries are siblings.

Opening and registering the ESP

The RESP promoter must notify the parent or the legal guardian that an ESP has been opened for the beneficiary within 90 days of establishing the plan. The CESP system is responsible for communicating to the CRA the request to register the ESP. For more information, see Chapter 1-4: Registered Education Savings Plans (RESPs).

Step 3

The RESP promoter reviews the eligibility criteria with the subscriber to identify whether the beneficiary qualifies for the Basic CESG or both the Basic and the Additional CESG. See 2. Eligibility criteria.

Step 4

The RESP promoter ensures the appropriate application form is completed and obtains the required information and signatures.

Note: Maintain the original signed application form according to established record keeping procedures.

For instructions to complete the form, see Appendix A: Application forms – Education savings incentives.

Individual PCG

If applying for the Additional CESG amounts for a beneficiary in care of an individual PCG, make sure to obtain the SIN of the PCG or their cohabiting spouse or common-law partner, if applicable.

The individual PCG is the person eligible to receive the CCB.

Public PCG

If applying for the Additional CESG amounts for a beneficiary in care of a public PCG, make sure to obtain the PCG’s BN.

The public PCG could be a department, agency, or institution that receives a payment for the child under the CSAA.

Accurate information ensures payment of the CESG

When completing the CESP application form, it is important to verify the accuracy of all information. Information on this form is used to electronically submit the CESG request to the CESP system. Inaccurate information may result in the transaction being rejected, delaying the payment of the CESG. For more information, see Chapter 1-3: CESP system and interface transaction standards (ITS).

Subscriber again

Step 5

The subscriber makes contributions to the RESP which are required to qualify for the Basic CESG and the Additional CESG.

Note: Special conditions apply to contributions made during the calendar years in which the beneficiary turns 16 and 17 years old. See 2.5. Contributions for 16 and 17 year-old beneficiaries.

RESP contribution limits per beneficiary

The RESP promoter can take this opportunity to remind the subscriber of RESP contribution limits in respect of each beneficiary:

  • 1998 to 2006:
    • Annual RESP contribution limit $4,000
    • Lifetime RESP contribution limit $42,000
  • Since 2007:
    • Annual RESP contribution limit No limit
    • Lifetime RESP contribution limit $50,000

RESP Promoter

Step 6

The promoter processes the application form according to their established procedures.

6.2. Post-application checklist

  • Confirm all information has been accurately recorded on the CESP application form.

    Accurate information ensures timely payment of the CESG. Inaccurate information may result in a delayed payment.

  • Remind subscribers of RESP contribution limits, informing them of the need to coordinate contributions if they are aware of other RESPs that have been established for the beneficiary.

    This will help avoid overcontributions and potential penalty taxes.

  • Remind the subscriber that more than one RESP can be established for a beneficiary and that this could result in the CESP system receiving multiple requests for the CESG in respect of the beneficiary.

    If multiple requests for the CESG are submitted for the same beneficiary, the CESG will be paid to the first request submitted and successfully processed by the CESP system.

    For more information, refer to 7.1 Order of payments.

  • If the subscriber is not the beneficiary’s custodial parent or legal guardian, advise the subscriber that the RESP promoter must notify the custodial parent or legal guardian within 90 days that an ESP has been opened.
  • Advise subscribers that they will be notified by the RESP promoter once the ESP has been registered with the CRA.
  • Advise subscribers that they will be notified by the RESP promoter of the CESG payments to the RESP.

7. Receiving and depositing the CESG

Once RESP promoters receive a CESG payment from ESDC, they are responsible for:

  • depositing the payment into the appropriate RESP; and
  • accounting for the payment in the CESG notional account.

7.1. Order of payments

Since a child can be a beneficiary of more than one RESP at a given time, the CESP system responds to requests for the CESG on a first-come, first-served basis.

Therefore, when multiple requests for the CESG are submitted for the same beneficiary in the same monthly reporting period, the CESG will be paid for the request with the earliest transaction date. If more than one CESG request has the same contribution date, the CESG amount paid is pro-rated across all successfully processed requests in that processing period.

7.2. Sharing the CESG and earnings – family and group plans

The Basic CESG, the Additional CESG and the RESP earnings can be used in an educational assistance payment (EAP) by any eligible beneficiary of the RESP, as long as the beneficiary meets the requirements for the EAP.

However, the existence of any Additional CESG in the RESP places restrictions on who can be named as a beneficiary of the plan and who can share those additional amounts and associated earnings. For the plan to have received the Additional CESG, all of the beneficiaries of a family plan had to have been siblings.

The CESG and the earnings on the CESG cannot be shared among beneficiaries in a group plan, regardless of whether or not the plan received the Basic CESG or the Additional CESG.

Forfeited CESG and earnings on the CESG in group plans

The Canada Education Savings Regulations stipulate that the “CESG and the earnings generated on them may only be shared among the beneficiaries of the RESP.” The term “RESP” refers only to the individual contract itself and not the group RESPs under the same specimen plan. As a result, the forfeited CESG and the forfeited earnings on the CESG cannot be redistributed amongst group plan cohorts.

While any forfeited amounts of the CESG must be repaid to the government of Canada, forfeited earnings can be managed in one of the following ways:

  • as an accumulated income payment (AIP)
  • as a payment to a designated educational institution

For more information about these options, see Chapter 3-3: Options for assets remaining in the RESP.

7.3. Reasons for non-payment of the CESG

To ensure that an RESP receives all eligible amounts of the CESG, the RESP promoter must:

  • ensure the CESP application form is completed accurately. See Appendix A: Application form - education savings incentives.
  • submit the information collected on the form, along with other required information, to the CESP system via electronic transactions. These transactions must pass the required validation for the formatting and business rules specified in the CESP Interface Transaction Standards (ITS).

The CESP system acknowledges a successfully processed request for the CESG by sending the RESP promoter a record in their monthly transaction processing report. This record will include the CESG amount that will be paid.

There may be situations in which the CESG will not be paid for specific CESG requests and the CESP system will send reports to the RESP promoter if:

  • a request for the CESG is rejected; or
  • a request for the CESG is refused.

For more information about the information exchanged between the RESP promoters and the CESP system, see Chapter 1-3: CESP system and interface transaction standards (ITS).

7.3.1. When requests for the CESG are rejected with an error code

If a request for the CESG contains an error (e.g. the electronic transaction has an error in formatting) it will be rejected by the CESP system with an error code. The CESP system generates monthly error reports and RESP promoters are responsible for making the necessary corrections for these rejected transactions.

For more information about error codes, see Appendix E, Understanding error codes.

7.3.2. When requests for the CESG are processed with a refusal reason

The CESG payment may be refused by the CESP system for successfully processed CESG requests if one or more of the CESG business rules are not satisfied. For example, contributions made after December 31 in the year the beneficiary turned 17 are not eligible for the CESG.

The CESP system informs RESP promoters when a CESG request has been successfully processed with a refusal reason in their monthly transaction processing report.

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

7.4. Condition for payment of the CESG – three-year rule

A request for the CESG must be submitted and successfully processed within three years of the corresponding contribution date.

This condition ensures that the RESPs of eligible beneficiaries receive the CESG within a reasonable timeframe and that payments are not delayed due to administrative issues.

This three-year rule also applies to correcting financial transactions. If the RESP promoter submits incorrect information or makes a formatting error in the financial transaction, they must correct and re-submit that transaction within three-years of the original transaction date.

Example: Three-year rule

A contribution was made on July 14, 2016. However, due to a keying error on the part of the RESP promoter, the contribution transaction did not include a request for the CESG.

The CESP system returned a record in the transaction processing report, notifying the RESP promoter that the CESG was not paid because it was not requested (refusal reason 6 “transaction requested no grant/bond”).

To obtain the CESG on this contribution, the RESP promoter must reverse the original transaction (that requested no grant) and resubmit a new transaction with the ‘grant requested flag’ set to “Yes”. The new transaction must be sent in a file to the CESP system within three years of the July 14, 2016, transaction date, (no later than July 14, 2019) and that resubmitted transaction must be successfully processed by the CESP system.

If the RESP promoter fails to successfully submit or correct a transaction within the three-year period, the CESP system will process the transaction but will not pay the CESG.

8. Repaying the CESG

Certain circumstances require a repayment of the CESG to the Government of Canada. They fall under one of two categories (or types), as follows:

  • withdrawal of assisted contributions
  • other repayment circumstances

The type of circumstance will determine the method used to calculate the amount of CESG that must be repaid.

Repayment consequences

Repayment of the CESG is not restored to the beneficiary’s grant room. For more information, see 3. Annual CESG limits and grant room.

8.1. Repayment process

The RESP promoter must:

  1. recognize and identify circumstances that require a CESG repayment;
  2. determine the CESG amount to repay; and
  3. submit the required financial transaction(s) to the CESP system, indicating the amount and reason for the repayment. See 8.4 Submitting repayment information to the CESP system.

8.2. Withdrawal of contributions

The CESG was introduced as a contribution-based incentive to encourage parents to save for their child’s post-secondary education. Consequently, there are specific rules that govern the withdrawal of contributions from an RESP.

8.2.1. Order of contribution withdrawals

When a subscriber withdraws contributions from an RESP, they are considered to be withdrawn in the following order:

  1. assisted contributions that were made in 1998 and after
  2. unassisted contributions that were made in 1998 and after
  3. unassisted contributions that were made before1998

A subscriber can withdraw contributions from an RESP without having to repay the CESG only if:

  • the withdrawal is to correct an overcontribution less than $4,000; or
  • a beneficiary of the plan is eligible to receive an EAP.

In any other instance, the withdrawal of assisted contributions requires a repayment of the CESG.

Withdrawals to correct an overcontribution

Under normal circumstances, a withdrawal of contributions will require a repayment of the CESG. However, if the withdrawal is to correct an overcontribution and the amount of the overcontribution at the time of the withdrawal is $4,000 or less, the CESG does not have to be repaid.

The subscriber is required to complete and provide the RESP promoter with the form entitled Subscriber Statement for an RESP Overcontribution Withdrawal of $4,000 or less. See Appendix D: Forms index - Education savings incentives. This document must be kept with the client’s file; it represents a record as to why the RESP promoter did not submit a CESG repayment amount when a withdrawal of contributions occurred.

For more information, see Chapter 1-4: Registered Education Savings Plans (RESPs).

8.2.2. Calculating the CESG repayment – withdrawal of assisted contributions

The amount of CESG that must be repaid due to a withdrawal of assisted contributions must be calculated using the following formula:

A / B x C

where:

  • A = the balance of the CESG notional account for the RESP immediately before the withdrawal of contributions
  • B = the balance of the assisted contributions notional account for the RESP immediately before the withdrawal of contributions
  • C = the amount of the assisted contribution withdrawn

To determine the amount of CESG to be repaid, the RESP promoter must determine the amounts represented by “A”, “B” and “C” and calculate the results using this formula.

Consider the following example that includes payments of both the Basic and the Additional CESG.

Calculating the CESG repayment – withdrawal of assisted contributions
Year Age of beneficiary Assisted contributions Basic CESG paid Additional CESG rate Additional CESG paid Total CESG Contributions withdrawn
2005 Born $2,000 $400 20%
(of first $500)
$100 $500
2006 1 $2,000 $400 20%
(of first $500)
$100 $500 $800
Totals: $4,000 $800 $200 $1,000 $800

In this example, the formula values are:

  • A = $1,000 Balance of the CESG notional account for the RESP immediately before the withdrawal of contributions
  • B = $4,000 Balance of the assisted contributions notional account for the RESP immediately before the withdrawal of contributions
  • C = $800 Amount of the assisted contributions withdrawn

Note: Contributions are considered to be withdrawn from the assisted contributions notional account first. See 8.2.1 Order of withdrawals.

A / B x C = $1,000 / $4,000 x $800 = $200

The RESP promoter must submit a repayment transaction to the CESP system to report a CESG repayment amount of $200 with a repayment reason of 01 (Contribution withdrawal). Each beneficiary in this RESP would not be eligible for the Additional CESG under any RESP for the remainder of 2006 and for the following two calendar years. See 8.2.3 Withdrawing contributions after March 22, 2004.

8.2.3. Withdrawing contributions after March 22, 2004

The withdrawal of assisted contributions from an RESP after March 22, 2004, may cause all beneficiaries named in that RESP to become ineligible for the Additional CESG rates for:

  • the balance of that calendar year; and
  • the next two calendar years.

As this “anti-churning” rule is administered across all plans, a contribution withdrawal from one plan may cause a beneficiary to become ineligible for the Additional CESG in any other plan in which the beneficiary is named as a beneficiary. This means if a contribution withdrawal is made from a family plan with multiple beneficiaries, all of the beneficiaries of the plan will be considered ineligible for the Additional CESG, even if contributions are made in respect of these beneficiaries in other RESPs.

RESP promoters that request the Additional CESG in respect of affected beneficiaries will receive a refusal reason “F” (anti-churning rule violation).

A beneficiary’s eligibility for the Basic CESG is not affected by this anti-churning rule.

Furthermore, the anti-churning rule does not apply if:

  • the withdrawal of contributions occurs when a beneficiary is eligible for an EAP; or
  • the withdrawal is to correct an over-contribution of less than $4,000 (across all RESPs) at the time of the withdrawal.

8.2.4. Withdrawing pre-1998 contributions

As the CESG was introduced in 1998, any RESP contributions made prior to that year do not qualify for this education savings incentive.

RESP contributions made before 1998 cannot be withdrawn and then re-contributed to the same, or another RESP, with the intention of receiving the CESG.

Consequences of withdrawing pre-1998 contributions

As explained in 8.2.1. Order of contribution withdrawals, a certain order must be followed when withdrawing RESP contributions. A withdrawal of pre-1998 contributions will cause all beneficiaries under the plan to be ineligible for any CESG (Basic or Additional) under any plan:

  • in the calendar year in which the withdrawal was made; and
  • for the following two calendar years.

8.3. Other repayment circumstances

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

The RESP promoter must also repay the CESG in an RESP in the following circumstances:

  • The RESP is terminated.
  • The registration for the RESP is revoked.
  • An accumulated income payment (AIP) is made.
  • A payment to a designated educational institution is made.
  • An EAP is made to an individual who is not a beneficiary of the RESP.
  • An ineligible transfer occurs.
  • An ineligible beneficiary replacement occurs.
  • A beneficiary, who is not a sibling, is added to a sibling-only RESP after the Additional CESG has been paid into this RESP.

Promoters initiate a CESG repayment from an RESP by submitting a transaction to the CESP system, indicating the amount of the CESG to repay and the repayment reason. The CESP system makes monthly direct deposits for each promoter, which includes all education savings incentive payments made for all successfully processed transactions submitted by the promoter in the previous month. All repayment amounts for the previous month are subtracted from the amount that would normally be paid to promoters in their next direct deposit. See 8.4. Submitting repayment information to the CESP system.

Beneficiaries may also be asked to return the CESG amounts paid in EAPs

Beneficiaries are allowed to receive a lifetime EAP limit of $7,200 in CESG. They must also be residents of Canada to receive the CESG amounts in an EAP.

If it is determined that they were not entitled to receive the CESG amounts in some of their EAPs, beneficiaries may receive a notice of debt for these amounts, with repayment instructions.

Promoters would not submit transactions to the CESP system in these cases because the beneficiary pays this debt directly to the Government of Canada. However, there may be situations in which a beneficiary could avoid having to pay this debt. Promoters can contact their CESP promoter support officer for additional information.

8.3.1. Calculating the repayment amount – other circumstances

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

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

8.4. Submitting repayment information to the CESP system

The RESP promoter must submit the following transaction to the CESP system to repay the CESG:

Record type (RT) 400, transaction type (TT) 21 (Grant repayment)

This transaction identifies the repayment reason using one of the following codes:

  • 01 Contribution withdrawal
  • 02 AIP (accumulated income payment)
  • 03 Contract termination
  • 04 Ineligible transfer
  • 05 Ineligible beneficiary replacement
  • 06 Payment to an educational institution
  • 07 Revocation (of plan)
  • 08 Ceases to meet sibling-only condition
  • 09 Deceased (beneficiary)
  • 10 Overcontribution withdrawal
  • 11 Other

For more detailed information about how transactions are processed between the RESP promoter and the CESP system, see Chapter 1-3: CESP system and interface transaction standards (ITS).

8.5. How funds are used to repay the CESG

The repayment transactions submitted to the CESP system will depend on whether or not there are sufficient funds in the RESP at the time the repayment is required.

8.5.1. When sufficient funds exist in the RESP

If there are sufficient funds in the RESP, the RESP promoter will repay the CESG from the corresponding notional account.

Repayment Reason: The CESG will not be used as an EAP by the beneficiary or other eligible beneficiary and the plan is terminated. The RESP individual (non-family) plan looks like this:

  • RESP Market Value: $26,829
  • Earnings: $9,229
  • Contributions: $14,000
  • CESG: $3,600

CESG Repayable: $3,600

In this example the RESP promoter would withdraw the funds from the RESP and submit the following repayment transaction to the CESP system:

RT 400-21(03): Grant repayment transaction, reason code (03), identifying a contract termination, with $3,600 in the CESG amount field identifying the repayment amount.

If the RESP includes other education savings incentives administered by ESDC, they may also have to be repaid. Refer to the related chapters in Section 2: Education savings incentives.

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

When the RESP is terminated, all of the CESG and any other education savings incentive must be repaid.

If the RESP has experienced a loss and there are insufficient funds to cover the total amount of the repayable CESG, the RESP promoter must submit a termination adjustment transaction to the CESP system to advise it of 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 education savings incentive notional accounts in the RESP.

The following example illustrates how the RESP promoter would determine the amount and repayment transactions that must be submitted to the CESP system when only the CESG has been paid into the RESP.

Repayment Reason: The RESP is terminated. The RESP individual (non-family) plan looks like this:

  • RESP market value: $1,000
  • Earnings: $0
  • Contributions: $0
  • CESG: $1,200

Note: Losses in the plan have been applied to the earnings and then to contributions. Therefore, these accounts show a balance of $0.

Total Incentive (CESG) Repayment: $1,200

Based on this example, the CESG repayable amount ($1,200) exceeds the market value of the RESP ($1,000). Therefore, the RESP promoter must repay the lesser amount of $1,000.

To account for the difference of $200, the RESP promoter must also send a termination adjustment transaction to inform the CESP system of the shortfall, but only when the RESP is terminated.

The following transactions are used to submit this information:

  • RT 400-21(03): Grant repayment transaction with a reason code of (03), identifies a contract termination, and $1,000 in the CESG amount field identifies the repayment amount.
  • RT 400-22: Termination Adjustment transaction, identifies $200 as the amount of the shortfall (market value less than CESG paid into the RESP).

Even if the CESG repayment is $0, as a result of losses in RESP earnings, contributions, and the CESG, the two transactions above must still be reported to CESP.

If the RESP includes other education savings incentives administered by ESDC, they may also have to be repaid. Refer to the related chapters in Section 2: Education savings incentives.

9. Other transactions involving the CESG

The RESP promoter may also be asked to process other transactions involving the CESG. These include:

  • Transferring funds (including the CESG) from one RESP to another.
    See Chapter 3-1: RESP transfers and the education savings incentives.
  • Responding to a request for an EAP and calculating the grant portion of the EAP.
    See Chapter 3-2: Post-secondary education and educational assistance payments (EAPs).

Chapter 2-2: The Canada Learning Bond (CLB)

The Government of Canada introduced the Canada Learning Bond (CLB) in 2004 to provide an education savings incentive for children in low-income families, and for children in care. Employment and Social Development Canada (ESDC) is responsible for the administration and delivery of this education savings incentive. Within ESDC, the Canada Education Savings Program (CESP) provides the delivery mechanism and necessary system supports for the effective administration of this education savings incentive.

The purpose of the CLB is to help residents of Canada to plan and save for a child’s post-secondary education expenses by investing in a Registered Education Savings Plan (RESP).

RESP promoters must enter into agreements with ESDC to offer the CLB or any other education savings incentive administered by ESDC.

The CLB consists of:

  • an initial CLB payment; and
  • subsequent CLB payments.

See Appendix C for a list of acronyms and terms used in this guide.

1. The CLB – An overview

The CLB is an education savings incentive for eligible children born on or after January 1, 2004.

  • Since July 1, 2017, eligibility for the CLB is based, in part, on the number of qualified children and the adjusted income of the individual primary caregiver (PCG).
  • For years prior to July 1, 2016, a child was eligible for the CLB if the individual PCG was in receipt of the National Child Benefit Supplement (NCBS) for that child.
  • From July 1, 2016, to June 30, 2017, a child was eligible for the CLB if the individual PCG would have otherwise been in receipt of the NCBS for the child, had it continued to be paid for that period.

    or

  • A child in care of a public PCG may be eligible for the CLB if the PCG is eligible to receive payments under the Children’s Special Allowances Act (CSAA) for that child.

The CESP system tracks the CLB entitlements for an eligible child as they accumulate until an RESP is designated to receive the CLB for the child.

While an RESP is required to receive the CLB, no contributions are required.

CLB entitlements include:

  • an initial CLB payment of $500 for the first year the child is eligible; and
  • subsequent CLB payments of $100 for each additional year of eligibility, up to and including the year in which the child turns 15.

While the maximum lifetime CLB limit is $2,000 per beneficiary, the total CLB amount paid into an RESP in respect of a beneficiary depends on the number of years that the beneficiary meets the eligibility criteria.

Children named as an RESP beneficiary can ultimately use the CLB amounts paid to an RESP, on their behalf, to help offset their costs of post-secondary education with educational assistance payments (EAPs).

2. Eligibility criteria

  • Is the beneficiary currently a resident of Canada?
  • Was the beneficiary born in 2004 or later?
  • Does the beneficiary have a valid Social Insurance Number (SIN)?

AND

  • For benefit years beginning on July 1, 2017, was the individual PCG’s adjusted income:
    • for PCG’s with up to three qualified children, less than or equal to the lowest income tax threshold; or
    • for PCG’s with more than three qualified children, less than the amounts determined by the formula in the Canada Education Savings Act?
  • For benefit years prior to July 1, 2016, was the individual PCG in receipt of the NCBS for the child?
  • From July 1, 2016, to June 30, 2017, would the individual PCG have been in receipt of the NCBS for the beneficiary if it had continued to be paid for that period?

OR

  • Did the public PCG receive payments under the CSAA for a child in care, for at least one month of the benefit year?

If all of these questions have been answered in the affirmative, the beneficiary may be eligible for the CLB.

2.1. Information required to request the CLB

The CESP system requires PCG information or, as of January 1, 2018, that of their cohabiting spouse or common-law partner, if applicable, to validate the beneficiary’s eligibility for the CLB with the Canada Revenue Agency (CRA). The RESP promoter submits the CLB request for a beneficiary to the CESP system and the information provided with that request is used to assess the beneficiary’s CLB eligibility at that time.

The CESP system then continues to automatically validate eligibility for a beneficiary’s subsequent CLB entitlements each year using the same information, unless a more recent CLB request with new information has been submitted to the CESP system.

For information about multiple CLB requests for the same beneficiary, see 2.4. Designating an RESP for the CLB payments.

2.1.1. Individual PCG

A person is the individual PCG of a beneficiary if they are eligible to receive the Canada child benefit (CCB) for the beneficiary. A beneficiary could have more than one individual PCG if two people, who do not live together, share custody of the beneficiary. For more information, see 2.5 Shared custody.

The CCB is a tax-free monthly payment made to eligible families to help them with the cost of raising children under the age of 18. To be eligible to receive the CCB, it is necessary to complete an application form with the CRA. Budget 2016 announced the creation of the CCB, which replaced the Canada Child Tax Benefit (CCTB), the NCBS and the Universal Child Care Benefit (UCCB).

  • Since July 1, 2017, eligibility criteria for the CLB are found within the Canada Education Savings Act. The new eligibility requirements are similar to the NCBS. More specifically, the new eligibility requirements are also based, in part, on the number of qualified children and the adjusted income of the individual PCG.
  • For the 2016-17 benefit year, eligibility for the CLB was based on whether the individual PCG would have been in receipt of the NCBS for the child, had it continued to be paid for that period.
  • Until June 2016, the CLB was payable for a beneficiary in respect of whom the NCBS was payable. The NCBS was based, in part, on the number of qualified children and the adjusted income of the individual PCG. With the introduction of the CCB, an amendment to the eligibility criteria for the CLB was required.

An individual PCG or, as of 2018, their cohabiting spouse or common-law partner, if applicable, must provide their name and SIN on the CESP application form to request the CLB. The following information is then used to validate a beneficiary’s eligibility for the CLB:

  • the adjusted income of the beneficiary’s individual PCG
  • the number of qualified children associated with the PCG

The CRA calculates an individual PCG’s adjusted income using, in part, the net income reported on line 236 of tax returns filed by the individual PCG, and that of their cohabiting spouse or common-law partner, if applicable.

For more information about the CCB, the CCTB, or the NCBS, call the CRA at 1-800-387-1193 or visit the following CRA Web site: https://www.canada.ca/en/revenue-agency/services/child-family-benefits/canada-child-benefit-overview.html.

2.1.2. Public PCG

A payment under the Children’s Special Allowances Act (CSAA) is a tax-free monthly payment for a child who is under the age of 18, who physically resides in Canada, and who is under the care of an organization.

An organization is the public PCG of a beneficiary if it is entitled to receive payments for the beneficiary under the CSAA.

Children in care of public PCG may be eligible for the CLB. A public PCG must provide their business number (BN) on the CESP application form to request the CLB in respect of a beneficiary.

2.2. Types of RESPs and the CLB

To receive the initial and subsequent CLB payments for eligible beneficiaries, the RESP must be:

  • an individual (non-family) plan; or
  • a family plan in which all beneficiaries are siblings.

2.3. CLB entitlements, earnings, and the RESP

No interest will be paid on the CLB entitlements that have not been paid into an RESP by the Government of Canada.

Therefore, subscribers are encouraged to complete the necessary steps, such as opening an RESP and applying for the CLB for the beneficiary. Once paid into an RESP, the CLB and any other savings contributed to the RESP will likely grow over time and accumulate earnings.

CLB timeline

Child’s birth to age 18: The subscriber opens an RESP in the beneficiary’s name. The PCG (or an individual PCG’s cohabiting spouse or common-law partner, if applicable) must designate the RESP that will receive the CLB payments.

Age 18 – 21: The beneficiary can open their own RESP in order to request the CLB entitlement that they have not received.

Age 21 or older: In most cases, any unclaimed CLB amounts which have not been paid into an RESP are forfeited.

2.4. Designating an RESP for the CLB payments

The beneficiary’s PCG or, as of 2018, an individual PCG’s cohabiting spouse or common-law partner, if applicable, must designate the RESP to receive, in trust, the CLB payments for the beneficiary. This is accomplished by completing the CESP application form. See Appendix A: Application Form – Education Savings Incentives

Only one RESP can be designated to receive the CLB payments at any given time for a beneficiary. However, the PCG (or the individual PCG’s cohabiting spouse or common-law partner, if applicable) can select a different RESP into which future CLB payments will be deposited by completing a new CESP application form for the beneficiary.

When a different RESP is designated to receive the CLB payments for a beneficiary, the previous RESP becomes inactive for any future CLB payments of that beneficiary. However, any CLB amounts paid for the beneficiary into the previous RESP would remain in that RESP.

To request the CLB for a beneficiary and designate an RESP to receive the corresponding future CLB payments in respect of that beneficiary, RESP promoters must submit an electronic transaction (400-24) to the CESP system. This transaction must include the required information for the PCG (or the individual PCG’s cohabiting spouse or common-law partner, if applicable) which must be provided on the CESP application form. The CESP system uses information provided in the most recent CLB request to validate a beneficiary’s eligibility for the CLB in the designated RESP each year.

2.4.1. Stopping future CLB payments after terminating an RESP

If an RESP is terminated, the RESP promoter must ensure that future CLB payments to that RESP have been stopped.

Promoters will stop CLB payments for a particular beneficiary in an RESP by submitting a CLB request transaction (400-24) for the beneficiary with the “grant requested” field set to “0” (No). This transaction must be submitted for each beneficiary for whom there is an active CLB request in the terminated RESP.

For additional information, see Chapter 1-3: CESP system and Interface Transaction Standards (ITS).

2.5. Shared custody

If a beneficiary is cared for by an individual PCG and their cohabiting spouse or common-law partner, only one person would be eligible to receive the CCB for that beneficiary at any given time.

However, if two indivduals do not live together, but care for and share the custody of the beneficiary, they may share the CCB payments in respect of the beneficiary. In these situations, they may both be an individual PCG of the beneficiary at the same time.

Example

Robert and Sarah decided to live separately but agreed to share custody of their child, Natasha. As both Robert and Sarah applied for and receive their share of Natasha’s CCB payments, they are both an individual PCG in respect of Natasha.

Robert opened an individual RESP for Natasha on March 7, 2017, and Sarah also opened an RESP for Natasha on May 10, 2018. Both Robert and Natasha requested the CLB to be paid into their RESPs and provided the required information on the CESP application form when they opened their RESPs.

RESP for Natasha Individual PCG recognized by the CRA for Natasha Individual PCG named in the CLB request Transaction date of the CLB request
RESP A Robert and Sarah Robert March 7, 2017
RESP B Robert and Sarah Sarah May 10, 2018

In this example, eligibility for Natasha’s accumulated CLB entitlements would have been validated for the CLB request on March 7, 2017, using Robert’s information as Natasha’s individual PCG. RESP “A” would have been the designated RESP for Natasha’s CLB payments at that time.

When Natasha’s CLB request for RESP “B” was submitted to the CESP system on May 10, 2018, RESP “B” became the active RESP for Natasha’s CLB payments after that date. This new CLB request also made RESP “A” inactive for Natasha’s CLB payments as of that date.

Eligibility for Natasha’s CLB payment into RESP “B” in 2018 (normally in July) would be validated using Sarah’s information as the individual PCG. If the CESP system does not receive any new CLB requests for Natasha, RESP “B” would remain the active RESP for Natasha’s CLB payments and would receive these payments if Sarah satisfies the CLB eligibility requirements.

2.6. Tracking CLB entitlements for an eligible beneficiary

ESDC and the CRA share information to confirm a beneficiary’s eligibility for the CLB. ESDC tracks the amount of accumulated CLB entitlements for the child until an RESP is opened and the child is named as a beneficiary. The CLB entitlements only accumulate during the years in which the PCG satisfies the CLB eligibility criteria. See 2. Eligibility criteria.

The following chart illustrates how the CLB entitlements are tracked for an eligible child and ultimately paid once a subscriber opens an RESP for them and requests the CLB. During the application process, the beneficiary’s PCG (or, as of 2018, the PCG’s cohabiting spouse or common-law partner, if applicable) must designate the RESP into which the CLB entitlements will be paid. In this example, the beneficiary was born in 2007 but the RESP was not opened until 2016.

Tracking and paying the CLB entitlements
Year Eligible for initial or subsequent CLB Amount of the CLB entitlement Amount of the CLB paid into RESP Amount of accumulated CLB entitlement
2007 Initial CLB $500 $0 $500
2008 Subsequent CLB $100 $0 $600
2009 Subsequent CLB $100 $0 $700
2010 Not eligible $0 $0 $700
2011 Not eligible $0 $0 $700
2012 Subsequent CLB $100 $0 $800
2013 Subsequent CLB $100 $0 $900
2014 Subsequent CLB $100 $0 $1,000
2015 Subsequent CLB $100 $0 $1,100
2016 RESP is opened and the CLB is requested
2016 Not eligible $0 $1,100
(Total CLB: From 2007 to 2015)
$0
2017 Not eligible $0 $0 $0
2018 Subsequent CLB $100 $100 $0
2019 Subsequent CLB $100 $100 $0
Total $1,300

3. Applying for the CLB

The following illustration provides an overview of the CLB application process.

  1. Establish the ESP; notify parent / legal guardian within 90 days
    Individual (non-family) plan or family plan with siblings only
    • Subscriber SIN
    • Beneficiary SIN
  2. Confirm eligibility criteria
    • Individual PCG (or their cohabiting spouse or common-law partner)
      • Name and SIN
    • Public PCG
      • Business number (BN)
  3. Complete and sign application form
    • ESDC SDE 0093
  4. Submit Information to the CESP system / request registration of ESP

    Electronic transaction

  5. The CESP system validates data; communicates with the CRA to request registration of the ESP
  6. The CESP system calculates and pays the CLB

3.1. The application process – the CLB

Who is involved

The application process for the CLB includes the participation of the following:

  • the RESP promoter
  • the subscriber(s)
  • a custodial parent or legal guardian
  • the PCG or their cohabiting spouse or common-law partner, if applicable

Note: The RESP promoter must be authorized to offer the CLB.

The following provides a step-by-step overview of the application process:

  1. Subscriber: The subscriber approaches an RESP promoter authorized to offer the CLB with the intent of opening and registering an ESP and naming a beneficiary.
  2. RESP promoter: The promoter establishes the ESP, making sure to obtain the SINs for:
    • the subscriber; and
    • the beneficiary.
    Note: To receive the CLB, the plan must be an individual (non-family) plan or a family plan in which all beneficiaries are siblings.
    Opening and registering the ESP

    The RESP promoter will notify the parent or legal guardian that an ESP has been opened for the beneficiary within 90 days of establishing the plan. The CESP system is responsible for communicating to the CRA the request to register the ESP. Once the plan has been registered, the CRA will notify the RESP promoter directly. For more information, see Chapter 1-4 Registered Education Savings Plans (RESPs), 2. Establishing the RESP.

  3. The promoter reviews the eligibility criteria with the subscriber to determine whether the beneficiary is eligible for the CLB. See 2. Eligibility Criteria.
  4. The promoter ensures that the CESP application form is completed and obtains the necessary signatures.
    Individual PCG

    If applying for the CLB for a beneficiary in the care of an individual PCG, make sure to obtain the SIN of the PCG or their cohabiting spouse or common-law partner, if applicable.

    The individual PCG is the person eligible to receive the CCB.

    Public PCG

    If applying for the CLB for a beneficiary in the care of a public PCG, make sure to obtain the PCG’s business number (BN).

    The public PCG could be a department, agency, or institution that receives a payment for the child under the CSAA.

    To view detailed instructions for completing these form(s), see Appendix A: Application form – education savings incentives..

    Accurate information ensures payment of the CLB

    When completing the application form, it is important to verify the accuracy of the information. The information on the application form is used to electronically submit the request to the CESP system. Inaccurate information will result in the transaction being rejected, delaying the payment of the CLB. For more information, see Chapter 1–3: The CESP system and Interface Transaction Standards (ITS).
  5. The promoter processes the CESP application form according to established procedures.

Use the following post-application checklist to provide the subscriber with some helpful reminders.

3.2. Post–application checklist

  • Confirm all information has been accurately recorded onto the CESP application form.
  • Remind the subscriber that the CLB is child-specific and that the CLB cannot be shared with other beneficiaries in the plan.
  • If the subscriber is not the beneficiary’s parent or legal guardian, advise the subscriber that the RESP promoter must notify the parent or legal guardian within 90 days that an ESP has been opened.
  • Advise subscribers that they will be notified by the RESP promoter when payment of the CLB is received and deposited into the RESP.

4. Receiving and depositing the CLB

Once RESP promoters receive a CLB payment from ESDC, they are responsible for:

  • depositing the payment into the appropriate RESP; and
  • accounting for the payment in the beneficiary’s CLB notional account.

4.1. Sharing the CLB and earnings – family and group plans

The CLB is an incentive that is directed to a specific eligible beneficiary. As such, there are restrictions on the sharing of the CLB and associated earnings in the RESP.

The CLB and earnings can be used in an EAP by the eligible beneficiary of the RESP, as long as the beneficiary meets the requirements for the EAP.

The following table identifies that beneficiaries cannot share the CLB but the situation can be different with the earnings.

Family plans *

  1. The CLB cannot be shared; it is directed to a specific eligible beneficiary.
  2. The beneficiary’s sibling(s) can share earnings if they are named as beneficiaries of the family plan.

* For the plan to have received the CLB amounts, all of the beneficiaries of a family plan had to have been siblings.

Group plans

  1. The CLB cannot be shared; it is directed to a specific eligible beneficiary.
  2. The earnings on the CLB cannot be shared with beneficiaries in the group plan.

4.2. Reasons for non-payment of the CLB

To ensure that RESPs receive all of the CLB payments in respect of eligible beneficiaries, the RESP promoter must ensure that:

  • the application form is completed accurately; and
  • submit the information collected on this form, along with other required information, to the CESP system via an electronic transaction. This transaction must pass the required validation for the formatting and business rules specified in the CESP Interface Transaction Standards.

The CESP system acknowledges a successfully processed CLB request by sending the RESP promoter a record in their monthly transaction processing report. This record will include the amount of the CLB that will be paid.

There may be situations in which the CLB will not be paid for specific CLB requests and the CESP system will send reports to the RESP promoter if:

  • a request for the CLB is rejected; or
  • a request for the CLB is refused.

For more information about the information exchanged between the RESP promoters and the CESP system, see Chapter 1–3: The CESP system and Interface Transaction Standards (ITS).

4.2.1. When requests for the CLB are rejected with an error code

If a request for the CLB contains an error (e.g. the electronic transaction has an error in formatting) it will be rejected by the CESP system with an error code. The CESP system generates monthly error reports and RESP promoters are responsible for making the necessary corrections for these rejected transactions.

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

4.2.2. When requests for the CLB are processed with a refusal reason

Payment may be refused for successfully processed CLB requests if one or more of the CLB business rules are not satisfied.

The CESP system informs RESP promoters when a CLB request has been successfully processed with a refusal reason in their monthly transaction processing report.

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

5. Repaying the CLB

Certain circumstances require a repayment of the CLB.

5.1. Repayment process

The RESP promoter must:

  1. recognize and identify circumstances that require a CLB repayment;
  2. determine the CLB amount to be repaid; and
  3. submit the required financial transaction(s) to the CESP system, indicating the repayment amount and the reason for repayment. See 5.4 Submitting Repayment Information to CESP.

5.2. Repayment circumstances

The RESP promoter must repay the CLB in an RESP under the following circumstances:

  • The RESP is terminated.
  • The registration for the RESP is revoked.
  • An accumulated income payment (AIP) is made.
  • A payment to a designated educational institution is made.
  • An EAP is made to an individual who is not a beneficiary of the RESP.
  • An ineligible transfer occurs.
  • An ineligible beneficiary replacement occurs.
  • A beneficiary who is not a sibling is added to a sibling-only RESP into which the CLB has been paid.
  • The beneficiary, for whom the CLB was paid into the RESP, ceases to be a beneficiary of the RESP (e.g. deceased).

Promoters initiate a CLB repayment from an RESP by submitting a transaction to the CESP system, indicating the amount of the CLB to repay and the repayment reason. The CESP system makes monthly direct deposits for each promoter, which includes all incentive payments made for all successfully processed transactions submitted by the promoter in the previous month. All repayment amounts for the previous month are subtracted from the amount that would normally be paid to promoters in their next direct deposit. See also 5.4. Submitting repayment information to CESP.

Beneficiaries may also be asked to return the CLB amounts paid in EAPs

If it is determined that they were not entitled to receive the CLB amounts in some of their EAPs, beneficiaries may receive a Notice of Debt for these amounts, with repayment instructions.

Promoters would not submit transactions to the CESP system in these cases because the beneficiaries pay this debt directly to the Government of Canada. However, there may be situations in which a beneficiary could avoid having to pay this debt. Promoters can contact their CESP promoter support officer for additional information.

5.3. Determining the repayment amount

If the promoter repays the CLB from an RESP for any of the reasons identified in 5.2 Repayment circumstances (except when a beneficiary ceases to be a beneficiary), the amount to repay is equal to the lesser of:

  • the balance of all CLB notional account(s) for the RESP beneficiaries immediately before the occurrence; and
  • the fair market value of the property held in the RESP, immediately before the occurrence.
When a beneficiary ceases to be a beneficiary

When a beneficiary, for whom the CLB was paid into the RESP, ceases to be a beneficiary of the RESP, the CLB amount to repay is equal to the lesser of:

  • the balance of the beneficiary's CLB notional account immediately before the beneficiary ceases to be a beneficiary; and
  • the fair market value, immediately before the beneficiary ceases to be a beneficiary, of the property held in connection with the RESP, less the total of the balances of the CLB notional accounts in the RESP for all other beneficiaries.
Consequences of repaying the CLB

The repayment of the CLB does not result in a loss of CLB entitlements for the beneficiary. If another RESP is designated for the beneficiary’s CLB payments at a later date, the repaid entitlements may be deposited into that RESP. While a beneficiary’s lifetime CLB entitlement is not affected by a CLB repayment, this does not apply to the CLB amounts that are reclaimed due to a CRA re-assessment.

5.4. Submitting repayment information to CESP system

The RESP promoter must submit the following transaction to the CESP system to repay the CLB:

  • Record type 400, transaction type 21 (grant repayment)

This transaction identifies the repayment reason using one of the following codes:

  • 02 AIP (accumulated income payment)
  • 03 Contract termination
  • 04 Ineligible transfer
  • 05 Ineligible beneficiary replacement
  • 06 Payment to an educational institution
  • 07 Revocation (of plan)
  • 08 Ceases to meet sibling-only condition
  • 09 Deceased (beneficiary)
  • 11 Other

Note: Repayment reasons 01 and 10 do not apply to the CLB.

For more detailed information about transactions and how they are processed between the RESP promoter and the CESP System, see Chapter 1–3: The CESP system and interface transaction standards (ITS)

5.5. How funds are used to repay the CLB

The repayment transactions submitted to the CESP system will depend on whether or not there are sufficient funds in the RESP at the time repayment is required.

5.5.1. When sufficient funds exist in the RESP

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

For example …

Repayment reason: The CLB will not be used as an EAP by the beneficiary and the plan is terminated. The RESP individual (non-family) plan looks like this:

  • RESP market value: $27,275
  • Earnings: $9,375
  • Contributions: $14,000
  • CLB: $300
  • CESG: $3,600

CLB repayable: $300

CESG repayable: $3,600

In this example, the RESP promoter would withdraw the funds from the RESP and submit the following repayment transaction to CESP:

400-21(03) CLB repayment transaction with a reason code of (03), contract termination, with: $300 in the CLB amount field and $3,600 in the CESG amount field

* Note: The CESG must also be repaid because the plan is being terminated.

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

When an RESP is terminated, the balance of all CLB notional accounts in the RESP must be repaid.

If the RESP has experienced a loss and there are insufficient funds to cover the total amount of the CLB (or other education savings incentives) repayable, the RESP promoter must submit a termination adjustment transaction to the CESP system to advise them of 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 education savings incentive notional accounts in the RESP.

The following example illustrates how the RESP promoter will determine the amount and repayment transaction that must be submitted to the CESP system when the CLB and the CESG have been paid into the RESP.

For example:

Repayment reason: The RESP is terminated. The RESP individual (non-family) plan looks like this:

  • RESP market value: $1,500
  • Earnings: $0
  • Contributions: $0
  • CLB: $800
  • CESG: $1,200

Note: Losses in the plan have been applied to the earnings and then to the contributions. Therefore, these accounts show a balance of $0.

  • CLB repayable: $800
  • CESG repayable: $1,200
  • Total repayable $2,000

Based on this example, the total amount repayable ($2,000) exceeds the market value of the RESP ($1,500). Therefore, the following calculations are required:

  1. Determine the remaining amount of incentives in the RESP: $800 (CLB) + $1,200 (CESG) = $2,000
  2. Determine the percentage represented by each incentive amount in the RESP:
    • CLB / Total value of incentives = % of CLB
      $800 / $2,000 = 40%
    • CESG / Total value of incentives = % of CESG
      $1,200 / $2,000 = 60%
  3. Apply these percentages to the RESP market value of $1,500:
    • Market value x % of CLB = CLB repayable
      $1,500 x 40% = $600
    • Market value x % of CESG = CESG repayable
      $1500 x 60% = $900

The following transaction is used to submit repayment information:

400-21(03) CLB repayment transaction with a reason code of (03), contract termination, with $600 in the CLB amount field and $900 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:

Total value of incentives – repayment amount = adjustment

  • CLB : $800 – $600 = $200
  • CESG: $1,200 – $900 = $300

To account for the difference of $500, the RESP promoter must also send a termination adjustment transaction to inform the CESP system of the shortfall, but only when the RESP is terminated.

The following transaction is used to submit this information:

  • 400-22 Termination adjustment transaction, identifying:
    • $200 as the amount of the shortfall applied to the CLB.
    • $300 as the amount of the shortfall applied to the CESG.

Even if the CLB repayment is $0, as a result of losses in RESP earnings, contributions, and incentives, the repayment transaction must still be reported to the CESP.

6. Other transactions involving the CLB

The RESP promoter may also be asked to handle other transactions involving the CLB. These include:

Chapter 2-3: British Columbia Training and Education Savings Grant (BCTESG)

The Government of British Columbia announced the British Columbia Training and Education Savings Grant (BCTESG) in 2013.

Employment and Social Development Canada (ESDC) has partnered with the Government of British Columbia to administer this provincial education savings incentive.

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

See Appendix C for a list of acronyms and terms used in this guide.

1. BCTESG – An overview

BCTESG is an education savings incentive that is paid:

  • by the Government of British Columbia;
  • from a designated provincial program administered by ESDC;
  • into an RESP;
  • for children born on or after January 1, 2006; and
  • for children who are residents in British Columbia (with a custodial parent or a legal guardian who is also a resident) at the time of the BCTESG application.

BCTESG is a $1,200 one-time grant per eligible beneficiary. When an eligible child turns six years old, the subscriber may be able to apply for the grant.

1.1. How it works

BCTESG payment is based on the following requirements:

  • An RESP: A subscriber must meet with a participating promoter, open an RESP and name an eligible beneficiary (ies).See Chapter 1-4: Registered Education Savings Plans.

    To be eligible to receive the BCTESG, the RESP must be an individual (non-family) plan or a family plan in which all beneficiaries are siblings.

Note: A contribution to the RESP is not required to receive the BCTESG.

  • Eligibility criteria: The subscriber and participating promoter review the BCTESG eligibility criteria. See 2. Eligibility criteria.
  • Application process: The subscriber asks the promoter to apply for BCTESG for the beneficiary. See 4. Applying for the BCTESG.
  • Educational assistance payments (EAPs): When the beneficiary is enrolled in a post-secondary education program, the subscriber can request an EAP, which is paid from the earnings and education savings incentives (including BCTESG) in the RESP. See Chapter 3-2: Post-secondary education and educational assistance payments (EAPs).

2. Eligibility criteria

Consider the following criteria to determine if a beneficiary is eligible for BCTESG payment:

  • Does the promoter offer BCTESG?
  • Has the subscriber established an RESP and named the beneficiary?
  • Does the beneficiary have a valid Social Insurance Number (SIN)?
  • Is the RESP either an individual RESP or a family RESP in which each beneficiary is a sibling Footnote 1 of every other?
  • Were the custodial parent or the legal guardian and the beneficiary ordinarily resident in British Columbia when the BCTESG application was made?
  • Was the beneficiary born on or after January 1, 2006?
  • Did the subscriber request the BCTESG (via the RESP promoter) on or after August 15, 2015?

If you can answer “Yes” to all of these questions, the beneficiary may be eligible for the BCTESG.

2.1. Age limits and application for the BCTESG

Key concept: Subscribers have a three year window to apply for the BCTESG.

For children born in 2010 or later, a BCTESG application must be completed on or after their 6th birthday, but before their 9th birthday.

The following table illustrates a transition period for children born in 2006, 2007, 2008 and 2009 in order to have the full three years to apply for the BCTESG. The subscriber must complete a BCTESG application within the appropriate three year period.

Note: The commencement date for the BCTESG was August 15, 2015. This was therefore the first day to apply for the BCTESG.

Table: Examples of BCTESG beneficiary eligibility dates
Birth Year 1st day to apply Last day to apply
2006 August 15, 2016 August 14, 2019
2007 August 15, 2015 August 14, 2018
2008
2009
(before August 15)
2009
(on August 15 or later)
The ay the
beneficiary turns 6
The day before the
beneficiary turns 9
2010
or later
Examples of transition period for children born between 2007 and 2009 to have three full years to apply for BCTESG
  • A beneficiary born on March 20, 2008, is eligible for the BCTESG from March 20, 2014, at age 6.

    The first day to apply for the BCTESG is August 15, 2015, (beneficiary is 7 years old) and the last day to apply is August 14, 2018, (beneficiary is 10 years old).

  • A beneficiary born on April 12, 2009 is eligible for the BCTESG from April 12, 2015, at age 6.

    The first day to apply for the BCTESG is August 15, 2015, (beneficiary is 6 years old) and the last day to apply is August 14, 2018, (beneficiary is 9 years old).

  • A beneficiary born on October 31, 2009, is eligible for the BCTESG from October 31, 2015, at age 6.

    The first day to apply for the BCTESG is October 31, 2015, (the beneficiary’s 6th birthday) and the last day to apply is October 30, 2018, (the day before the beneficiary’s 9th birthday).s 9 years old).

  • A beneficiary born on December 5, 2012, is eligible for the BCTESG from December 5, 2018, at age 6.

    The first day to apply for the BCTESG is December 5, 2018, (the beneficiary’s 6th birthday) and the last day to apply is December 4, 2021, (day before the beneficiary’s 9th birthday).

2.2. BCTESG and residency requirements

The custodial parent or the legal guardian and the beneficiary must be ordinarily resident in British Columbia at the time of the application to be eligible for the BCTESG.

Proof of residency must be shown to the RESP promoter at the time of application. At least one of the following documents must be presented:

  • a valid British Columbia driver’s license
  • a British Columbia Identification Card with a picture
  • a British Columbia Services Card (new BC CareCard and driver’s license will be fully implemented in 2018)
  • a British Columbia utilities bill (dated within the last 3 months and listing the current address of the custodial parent or the legal guardian). A utilities bill can be any one of: electricity, gas, phone, cable, water or garbage bills.

For more information in completing the required application form(s), see the Appendix A: Application forms – Education savings incentives on the Resources for RESP promoters page.

Eligibility and residency

If the BCTESG has been paid into an RESP and the custodial parent or the legal guardian and the beneficiary leave British Columbia at a later date, the BCTESG remains in the RESP.

3. BCTESG amounts

Key concept: The BCTESG amount is $1,200 per beneficiary.

3.1. BCTESG amounts in EAPs

Each beneficiary can attract only one $1,200 BCTESG payment to one RESP. Once an RESP has received this payment in respect of a particular beneficiary, no other RESP can receive a BCTESG payment for the same beneficiary. For more information, see 5.1. Multiple RESPs – Multiple requests for the same BCTESG beneficiary.

However, every beneficiary named in a family RESP has access to the full BCTESG amount in the plan, even if some BCTESG amounts paid (or transferred) into the plan were originally paid in respect of other siblings. Consequently, beneficiaries may receive more than $1,200 of accumulated BCTESG amounts in their EAPs throughout their post-secondary studies. See also 5.2 Sharing the BCTESG and earnings.

Example - Sharing BCTESG in EAPs

Laura is named in the following RESPs:

  • Family RESP with Promoter A (siblings only)
  • Individual RESP with Promoter B

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

4. Applying for the BCTESG

4.1. The application process

Who is involved?

The following key players participate in the BCTESG application process:

  • participating promoter
  • subscriber (s)
  • custodial parent or legal guardian

The promoter facilitates the BCTESG 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 in completing the BCTESG application form.

Note: The promoter must be authorized to offer the BCTESG.

The following steps are required to receive a BCTESG payment in an RESP.

  1. Subscriber: The subscriber approaches a promoter authorized to offer the BCTESG to open and register an ESP and name a beneficiary.
  2. Promoter: The promoter obtains the Social Insurance Numbers (SINs) for the subscriber and the beneficiary and establishes the ESP.
Opening and registering the ESP

The promoter must notify the custodial parent or the legal guardian, within 90 days of establishing the plan, that an ESP has been opened for the beneficiary. The CESP is responsible for communicating requests to register ESPs to the Canada Revenue Agency (CRA). CRA notifies promoters directly once plans have been registered. For more information, see Chapter 1-4: Registered Education Savings Plans.

  1. Promoter: The promoter reviews eligibility criteria with the subscriber to identify whether the beneficiary may be eligible for the BCTESG. See 2. Eligibility criteria.
  2. Promoter: The promoter completes the BCTESG application form with the subscriber and obtains the necessary information and signatures.
Accurate information prevents delays in the BCTESG payment

When completing the BCTESG application form, it is important to verify the accuracy of the information. Information on the application form is used to electronically submit BCTESG requests to the CESP. Inaccurate information will result in the transaction being returned and will delay the BCTESG payment. For more information, see Chapter 1–3: The CESP system and Interface Transaction Standards.

  1. Promoter: The promoter ensures that the application for the BCTESG is submitted within the specified time period. For more information, see 2.1. Age limits and application for the BCTESG and 5.4 Time constraints.
  2. Promoter: The promoter processes the application form according to established procedures.
What happens to information collected on the application form?

The information is entered into the promoter’s information system and then transmitted electronically to the CESP system to request registration of the ESP and to request the BCTESG payment. See Chapter 1-3: The CESP System and Interface Transaction Standards.

Promoters can also use the optional 4.2 Post-application checklist to provide subscribers with helpful reminders.

4.2. Post-application checklist

  • Confirm that all information has been accurately recorded onto the BCTESG application form.

    Note: Accurate information ensures the timely payment of BCTESG. Inaccurate information may delay payment.

  • Remind subscribers that the CESP may receive multiple BCTESG requests in respect of the beneficiary because multiple RESPs can be established for a beneficiary.

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

    For more information, see 5.1. Multiple RESPs – Multiple requests for the same BCTESG beneficiary.

  • If a subscriber is not the beneficiary’s custodial parent or legal guardian, advise the subscriber that the promoter must notify the custodial parent or the legal guardian within 90 days that an ESP has been established.
  • Advise subscribers that they will be notified by the promoter once the ESP has been registered with CRA.
  • Advise subscribers that they will be notified of the BCTESG payment by the promoter.

4.3. Requesting BCTESG payment

To request a BCTESG payment, promoters must submit a BCTESG request record (RT 411-40).

For more information, see the CESP Interface Transaction Standards on the Systems Documentation tab of the Resources for RESP promoters page.

Submitting a correction to the CESP system

To submit a correction to a BCTESG request transaction (411-40), the promoter must first submit a Cancel BCTESG Request transaction (411-41) followed by a transaction with the corrected information. Cancellations indicate that the original transaction did not occur as reported.

For more information, refer to the CESP Interface Transaction Standards.

5. Receiving and depositing the BCTESG

The CESP system sends a record (RT 911) in the monthly Transaction Processing Report sent to each promoter, to acknowledge the successful processing of each BCTESG request. This report indicates:

  • the BCTESG amount paid on successful requests; and
  • refusal reasons if the BCTESG amount is not paid.

For more information see 5.3 Reasons for non-payment of the BCTESG.

Once the CESP sends the BCTESG payment to promoters, they must:

  1. deposit each BCTESG payment into the appropriate RESP account in respect of the beneficiary;
  2. track and manage all RESP transactions using various RESP accounts;
  3. update the BCTESG account for each BCTESG payment made to an RESP; and
  4. notify the subscriber (via account statements) about all BCTESG amounts deposited into the RESP.

5.1. Multiple RESPs – Multiple requests for the same BCTESG beneficiary

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

Multiple BCTESG requests for the same beneficiary

There can be more than one RESP established for a beneficiary. Therefore, the CESP may receive more than one BCTESG request for the same beneficiary.

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

Example of multiple BCTESG requests for the same beneficiary

Laura is named in two Individual RESPs. One RESP is with Promoter A and the other is with Promoter B. BCTESG had not been paid for Laura in any RESP before the following transactions were submitted for processing in September 2015.

Table: Multiple requests for the same beneficiary example
Promoter A Promoter B
BCTESG request BCTESG request
Made on August 15, 2015 Made on August 25, 2015

As both BCTESG requests were processed for the same beneficiary in the same processing month, the CESP system will process the BCTESG request with the earliest transaction date first. Therefore, in this example the BCTESG request from Promoter A will be processed before the BCTESG request from Promoter B.

Promoter A would receive the $1,200 BCTESG payment.

As the BCTESG amount ($1,200) was not paid, Promoter B will receive a refusal reason E Lifetime Limit exceeded for this BCTESG request in their Transaction Processing Report.

5.2. Sharing the BCTESG and earnings

Although the maximum amount of BCTESG that may be paid for a beneficiary is $1,200, there is no limit to the amount of BCTESG that can be used by any one beneficiary.

All beneficiaries named in an RESP can share the BCTESG and the associated earnings in EAPs if they satisfy EAP eligibility criteria. See also 3.1 BCTESG amounts in EAPs.

5.2.1. Family RESPs

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

5.3. Reasons for non-payment of the BCTESG

To ensure the timely payment of BCTESG into RESPs in respect of eligible beneficiaries, the promoter must:

  • help subscribers to accurately complete the BCTESG application form; and
  • submit information collected on the form, along with other required data, to the CESP via electronic transactions. These transactions must pass all formatting and business rule validations according to the CESP Interface Transaction Standards.

For more information about the types of transactions and reports exchanged between promoters and the CESP, see Chapter 1-3: The CESP system and Interface Transaction Standards.

5.3.1. When transactions are rejected

The CESP system rejects promoter transactions that contain errors and generates corresponding error codes in a monthly Transaction Error Report (RT 800). These reports are sent electronically to each promoter’s head office. Promoters are responsible for correcting any errors and resubmitting corrected transactions to the CESP.

Transaction Error Reports identify BCTESG requests that were rejected due to either missing information or a failure to pass formatting and business rules.

For more information, see Appendix E: Understanding error codes.

5.3.2. 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 BCTESG requests (RT 911). While this report would indicate the amounts paid for all successful BCTESG requests, it would also identify any BCTESG requests for which the $1,200 BCTESG payment was refused.

The CESP system refuses BCTESG requests if they do not comply with business rules. For example, once the $1,200 BCTESG amount has been paid in respect of a particular beneficiary, any additional BCTESG requests for the beneficiary would be processed, but the corresponding BCTESG payment would be refused. See also 3. BCTESG amounts.

For more information, see Appendix F: Understanding refusal reasons.

5.4. Time constraints

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

The CESP system uses the BCTESG request (RT 411-40) transaction date to generate these refusal reasons. Promoters must use the date on which the subscriber requested BCTESG to determine the transaction date of a BCTESG request:

  • the BCTESG must be requested for eligible beneficiaries within the required timeframe as described in 2.1. Age limits and application for the BCTESG;

    and

  • transaction date must not be older than three years when compared to the date in the Header record 001 (the date sent to the CESP).

For more information, see the CESP Interface Transaction Standards on the Resources for RESP promoters page under the Systems Documentation tab.

5.4.1. Refusal reason 3 (age of beneficiary)

Promoters must request the BCTESG (RT 411-40) for eligible beneficiaries within the required timeframe as described in 2.1 Age limits and application for the BCTESG.

For the transitional period for children born in 2006, 2007, 2008 and 2009, the transaction date of the BCTESG request must fall into the following date ranges:

  • For children born in 2006 - From August 15, 2016, to August 14, 2019
  • For children born in 2007 - From August 15, 2015, to August 14, 2018
  • For children born in 2008 - From August 15, 2015, to August 14, 2018
  • For children born in 2009 - From August 15, 2015, or the day the beneficiary turns 6 (whichever is later) to August 14, 2018, or the day before the beneficiary turns 9 in 2018 (whichever is later)

For children born in 2010 or later the transaction date of the BCTESG request when compared to their birth date must fall on or between their 6th birthday and the day before their 9th birthday.

If the transaction date for the BCTESG request does not satisfy these requirements:

  • the BCTESG transaction will be processed by the CESP system;
  • BCTESG will not be paid; and
  • the promoter will receive a refusal reason 3 (Age of Beneficiary) in a record (RT 911) of their Transaction Processing Report.

Note: For the transitional period for children born in 2006, 2007, 2008 and 2009, a transaction date of the BCTESG request before August 15, 2015, will be rejected. Also, a BCTESG request for children born before 2006 will be rejected.

Examples of when subscribers must complete the BCTESG application to avoid a refusal reason 3
  • A child born on January 1, 2007, turns 6 on January 1, 2013. To avoid receiving a refusal reason 3 for the BCTESG request, the subscriber must complete a BCTESG application form with an eligible promoter between August 15, 2015, and August 14, 2018.
  • A child born on June 20, 2010, turns 6 on June 20, 2016. To avoid receiving a refusal reason 3 for the BCTESG request, the subscriber must complete a BCTESG application form with an eligible promoter between the child’s 6th birthday on June 20, 2016, and the day before the child turns 9 on June 19, 2019.
5.4.2. Refusal reason D (late transaction)

When promoters submit incorrect information or make formatting errors in their BCTESG request transactions (RT 411-40), they must correct and resubmit those transactions to the CESP in another file. If a file is sent more than 3 years after the original transaction date of a BCTESG request in the file:

  • the BCTESG transaction will be processed by the CESP system; and
  • the promoter will receive a refusal reason D (Late Transaction) in a record (RT 911) of their Transaction Processing Report.
Example of how to avoid receiving a refusal reason D

A BCTESG request with a transaction date of November 2, 2015, was rejected due to an error and the CESP system returned a Transaction Error Report record (RT 800) to the promoter in response to this request.

To avoid a refusal reason D and obtain a BCTESG payment for this request, the promoter must send a file with the corrected BCTESG request transaction to the CESP system within three years (November 2, 2018) after the original BCTESG transaction date and this transaction must be successfully processed by the CESP.

6. Repaying the BCTESG

Withdrawal of contributions will not trigger repayment of BCTESG but other circumstances may require the repayment of the BCTESG. For more information, see 6.2 Repayment Circumstances.

Repayment consequences

Repayment of BCTESG will result in loss of the beneficiary’s BCTESG eligibility, which will not be restored. For more information, see 3. BCTESG amounts.

6.1. Repayment process

The promoter must:

  1. recognize and identify circumstances that require BCTESG repayment;
  2. determine BCTESG amounts to repay; and.
  3. submit the required financial transaction(s) to the CESP system, indicating the amounts and repayment reasons. See 6.3 Submitting repayment information to the CESP.

Promoters initiate a BCTESG repayment from an RESP by submitting a transaction to the CESP system indicating the amount of BCTESG to repay and the repayment reason. The CESP makes monthly direct deposits for each promoter, which includes all incentive payments made for all successfully processed transactions submitted by the promoter in the previous month. All repayment amounts for the previous month are subtracted from the amount that would normally be paid to promoters in their next direct deposit.

6.2. Repayment circumstances

There are a number of circumstances in which BCTESG must be repaid.

The promoter must repay the BCTESG when:

  • the RESP is terminated;
  • the registration of the RESP is revoked;
  • all or part of the BCTESG was withdrawn from the RESP and not used as an EAP;
  • an accumulated income payment (AIP) is made;
  • a payment to a designated educational institution is made;
  • an EAP is made to an individual who is not a beneficiary under the RESP;
  • an ineligible transfer occurs;
  • an ineligible beneficiary replacement occurs;
  • a beneficiary, who is not a sibling, is added to a sibling-only RESP after the BCTESG has been paid into this RESP;
  • an application for the BCTESG contained false information.
6.2.1. Calculating BCTESG repayments

If the promoter repays BCTESG for any of the above reasons, the amount repayable is the lesser of:

  • The total balance of the BCTESG account (immediately before the triggering event).

    AND

  • The fair market value of the property held in the RESP (immediately before the triggering event).

6.3. Submitting repayment information to the CESP

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 BCTESG repayment (or any other incentive administered by ESDC) is considered to be a financial transaction.

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

  • RT 400, Transaction Type 21 (Grant repayment)

In addition, the transaction will identify the BCTESG Repayment Reason (or flag), with one of the following codes:

  • 02 Accumulated income payment (AIP)
  • 03 Contract termination
  • 04 Ineligible transfer
  • 05 Ineligible Beneficiary Replacement
  • 06 Payment to Educational Institution
  • 07 Revocation (of plan)
  • 08 Ceases to meet sibling-only condition
  • 11 Other

Note: Repayment Reasons 01, 09, 10, and 12 do not apply to the BCTESG. Therefore they are not included in this list.

In all repayment transactions, promoters must also report the BCTESG amount being repaid to the CESP. For more detailed information about how transactions are processed between the promoter and the CESP system, see Chapter 1-3: The CESP System and Interface Transaction Standards.

6.4. How funds are used to repay BCTESG

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.

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

When the plan is terminated and there are sufficient funds in the RESP, the promoter will repay the BCTESG 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. All incentives must be repaid because the plan is terminated.

RESP market value Earnings Contributions BCTESG Canada Education Savings Grant (CESG)
$27,575 $9,375 $14,000 $1,200 $2,800

BCTESG repayable = $1,200

CESG repayable = $2,800

Total repayable = $4,000

In this example, the promoter would withdraw the funds from the RESP and submit the following Grant repayment transaction (RT 400-21) to the CESP:

RT 400-21(03): Reason code = 03 (Contract termination)

  • $1,200 in the BCTESG amount field
  • $2,800 in the CESG amount field
6.4.2. When insufficient funds exist in the RESP and the plan is terminated

When the RESP is terminated, BCTESG (and all other incentives in the plan that are administered by ESDC) must be repaid.

If the RESP has experienced a loss and there are insufficient funds to cover the total BCTESG amount repayable, the promoter must submit a Termination Adjustment Transaction to the CESP to report the shortfall.

Losses are first attributed to earnings, and then to contributions. Once these accounts are depleted, any remaining losses are apportioned equally across the incentive accounts in the RESP.

Example - when insufficient 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. All incentives must be repaid because the plan is terminated.

RESP market value Earnings Contributions BCTESG Canada Education Savings Grant (CESG)
$3,800 $0 $14,000 $1,200 $2,800

First, determine the incentive amounts that would be repayable if there are sufficient funds in the RESP:

BCTESG repayable = $1,200 (if there are sufficient funds)

CESG repayable = $2,800 (if there are sufficient funds)

Total repayable = $4,000

In this example, the total amount of incentives that would normally be repayable ($4,000) exceeds the market value of the RESP ($3,800). Therefore, the following calculations are required to determine the actual repayable amount for each incentive:

  1. Determine the total amount of incentives in the RESP:
    $1,200 BCTESG + $2,800 CESG = $4,000
  2. Determine the percentage represented by each incentive in the RESP:
    $1,200 / $4,000 = 30% BCTESG
    $2,800 / $4,000 = 70% CESG
  3. Apply these percentages to the RESP Market Value of $3,800:
    30% of $3,800 = $1,140 of BCTESG that can be repaid
    70% of $3,800 = $2,660 of CESG that can be repaid

In this example, the promoter would withdraw the funds from the RESP and submit the following Grant repayment transaction (RT 400-21) to CESP:

RT 400-21(03): Reason code = 03 (Contract termination)

  • $1,140 in the BCTESG amount field
  • $2,660 in the CESG amount field

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

Incentive Notional account balance Amount payable (see above) Termination adjustment
BCTESG $1,200 $1,140 $60
CESG $2,800 $2,660 $140
Shortfall - - $200

The promoter must submit the following Termination adjustment transaction (RT 400-22) to inform the CESP of the $200 shortfall:

RT 400-22:

  • $60 in the BCTESG amount field
  • $140 in the CESG amount field

Note: Termination adjustments are only used when terminating an RESP that has experienced a loss and there are insufficient funds to cover the total amount of incentives repayable.

7. Other transactions involving the BCTESG

The promoter may be asked to handle other transactions involving BCTESG including:

Chapter 2-4: Saskatchewan Advantage Grant for Education Savings (SAGES)

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.

See Appendix C for a list of acronyms and terms used in this guide.

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, 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.

While each eligible beneficiary's SAGES grant room increases by $250 per eligible year, the annual SAGES amount that can be paid per beneficiary is limited to the lesser of:

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

Note: On March 22, 2017, the Government of Saskatchewan announced in their provincial budget that the SAGES will be suspended as of January 1, 2018, and until further notice. Additional information pertaining to the suspension of the SAGES is provided in information bulletin # 722 sent June 12, 2017, available through the Canada.ca/RESPresources Web page.

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. See Chapter 1-4: Registered Education Savings Plans (RESPs)>.
  • Eligibility criteria: The subscriber and participating promoter review the SAGES eligibility criteria. See 2. Eligibility criteria.
  • Application process: The subscriber asks the promoter to apply for SAGES for the beneficiary. See 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, which is paid from the earnings and education savings incentives (including SAGES) in the RESP. See chapter 3-2: Post-secondary education and educational assistance payments (EAPs).

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?

If you can answer "Yes" to all of these questions, the RESP contribution may be eligible for SAGES payments.

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, see 4. Annual SAGES limits and SAGES grant room.

Consequence of withdrawing contributions

The withdrawal of contributions may trigger a repayment of SAGES. For more information, see 8. Repaying SAGES.

2.2. Contributions and the SAGES age limit

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

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 minimum of $100 in annual RESP contributions has been made in respect of the beneficiary, and not withdrawn, in any four years (consecutive or not), by December 31st in the year the beneficiary turned 15.

    OR

  • A minimum of $2,000 in RESP contributions has been made in respect of the beneficiary, and not withdrawn, by December 31st in the year the beneficiary turned 15.
Example 1 – Four 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.

Year Beneficiary age Yearly contributions
2009 12 $120
2010 13 $120
2011 14 $120
2012 15 $120

Liam satisfies the 16 and 17 year rule for SAGES eligibility for RESP contributions at the age of 16 and 17, because at least $100 per year in RESP contributions were made for Liam in at least 4 separate years before the end of the calendar year in which Liam turned 15.

Example 2 – 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.

Year Beneficiary age Yearly contributions
2011 14 $1,000
2012 15 $1,000

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

3. Calculating SAGES amounts

SAGES formula

RESP contribution x 10% = SAGES amount

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

Example of calculating SAGES amounts

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

Year Beneficiary age Yearly contributions SAGES amount
2009 12 $120 unavailable
2010 13 $120 unavailable
2011 14 $120 unavailable
2012 15 $120 unavailable
2013 16 $120 $12
2014 17 $120 $12

The contributions to Liam's RESP prior 2013 did not attract any SAGES amounts because 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), for 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, see 2.3. Contributions for 16 and 17 year-old beneficiaries earlier in this chapter.

Promoter fees and the SAGES account

Fees are not to be charged to the education savings incentive portions of an RESP.

4. Annual SAGES limits and SAGES grant room

SAGES grant room increases annually by $250 per beneficiary.

Since January 1, 2013, $250 is added annually to the SAGES grant room for each eligible child (or since birth if the child was born after 2013). Unused SAGES grant room can accumulate until the end of the calendar year in which the child turns 17, even if the child was not named as an RESP beneficiary.

If contributions in respect of a beneficiary (across all RESPs in which the beneficiary is named) are insufficient to attract the full annual amount added to the beneficiary's SAGES grant room, the difference (unused SAGES grant room) can be carried forward and added to the accumulated SAGES grant room for use in future years.

Annual SAGES payments are limited to $500 per beneficiary.

While subscribers can potentially catch up on the unused SAGES grant room for a beneficiary, the maximum annual SAGES amount that can be paid into RESPs in respect of a particular beneficiary is limited to $500.

The annual SAGES amount payable per beneficiary is the lesser of the following two amounts:

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

As of January 1, 2018, the $250/year in SAGES grant room will not accumulate during the SAGES suspension period. However, beneficiaries will not lose the grant room they had prior to the suspension period.

4.1. Calculating SAGES grant room and carry forward

The following formula must be used 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

When SAGES grant room is carried forward from previous years, 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.

Example of calculating SAGES grant room and carry forward

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

Year SAGES grant room carried forward Annual amount added to SAGES grant room Accumulated SAGES grant room before contributions Annual contribution amount SAGES paid into RESP Unused SAGES grant room to carry forward
2013 - $250 $250
$0 + $250
$0 $0 $250
$250 – 0
2014 $250 $250 $500
$250 + $250
$0 $0 $500
$500 – 0
2015 $500 $250 $750
$500 + $250
$0 $0 $750
$750 – 0
2016* $750 $250 $1,000
$750 + $250
$10,000 $500 $500
$1,000 – 500
2017 $500 $250 $750
$500 + $250
$5,000 $500 $250
$750 – $500
2018** $250 $0 $250
$250 + $0
$5,000 $0 $250
$250 – $0
2019 $250 $0 $250
$250 + $0
$5,000 $0 $250
$250 – $0

* Note: Even though there is $10,000 in contributions for 2016, the SAGES amount paid would not exceed the maximum annual SAGES limit of $500 that year.

** Note: As of January 1, 2018, the $250/year in SAGES grant room will not accumulate during the SAGES suspension period. However, beneficiaries will not lose the grant room they had prior to the suspension period.

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 contribution was made.

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 that a beneficiary no longer satisfies the residency criteria.

5. Lifetime SAGES limits

The maximum lifetime SAGES limit is $4,500 per beneficiary.

The maximum lifetime limit of $4,500 is per eligible beneficiary, across all plans (if multiple RESPs opened in which the same beneficiary is named) and is paid until the end of the year in which the beneficiary turns 17.

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.

However, every beneficiary named in a family RESP has access to the full SAGES amount in the plan, 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. See also 7.2 Sharing SAGES and earnings.

Example of SAGES amounts in EAPs

Sandra is named 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.

6. Applying for SAGES

6.1. The application process – SAGES

Who is involved?

The following key players participate in the SAGES application process:

  • participating promoter
  • subscriber
  • custodial parent or legal guardian

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

    The promoter must notify the parent or legal guardian, within 90 days of establishing the plan, that an ESP has been opened for the beneficiary. ESDC is responsible for communicating requests to register ESPs to the Canada Revenue Agency (CRA). CRA notifies promoters directly once plans have been registered. For more information, see chapter 1-4: Registered Education Savings Plans (RESPs).

  3. Promoter: The promoter reviews eligibility criteria with the subscriber to identify whether the beneficiary qualifies for SAGES. See 2. Eligibility criteria.
  4. Promoter: Completes the SAGES application form with the subscriber and obtains the necessary information and signatures.
    Accurate information prevents delays in SAGES payments

    When completing the SAGES application form, it is important to verify the accuracy of the information. Information on the application form is used to electronically submit SAGES requests to the ESDC. Inaccurate information will result in the transaction being returned and will delay SAGES payments. For more information, see chapter 1–3: The CESP system and Interface Transaction Standards (ITS).

  5. Subscriber: The subscriber deposits contribution(s) to the RESP. Special conditions apply when a beneficiary is 16 and 17 years old. See 2.3 Contributions for 16 and 17 year-old beneficiaries.
    RESP contribution limits per beneficiary

    The promoter may remind subscribers that RESP contributions, in respect of each beneficiary, are limited to a lifetime limit of $50,000 (since 2007).

  6. Promoter: The promoter processes the application form according to established procedures.
    What happens to information collected on application forms?

    The information is entered into the promoter's information system and then transmitted electronically to ESDC to request registration of the ESP and to request SAGES payments. See chapter 1-3: The CESP system and Interface Transaction Standards.

Promoters can also use the optional 6.2 Post-application checklist to provide subscribers with helpful reminders.

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 SAGES will not be paid. Refusal reason “9” (Other) will be sent to promoters on SAGES requests made after December 31, 2017.

  • Confirm that all information has been accurately recorded 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, informing them of the need to coordinate contributions if they are aware of other RESPs that have been established for the beneficiary.

    This may avoid potential penalty taxes due to overcontributions.

  • Remind subscribers that the CESP may receive multiple SAGES requests in respect of the beneficiary because multiple RESPs can be established for a beneficiary.

    If the CESP receives two (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, see 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 they will be notified by the promoter once the ESP has been registered with CRA.
  • Advise subscribers that they will be notified of SAGES payments by the promoter.

6.3. Requesting SAGES payments for RESP contributions

Promoters report each RESP contribution to the CESP system in an electronic record (RT 400-11). To request a SAGES payment for one of these contributions, they must also submit a SAGES request record (RT 410-30), in which they identify the corresponding contribution.

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

6.4. Application for SAGES following transfer from non-offering promoters

Subscribers who transfer RESP accounts from a non-offering promoter to a SAGES offering promoter can request SAGES in respect of the contributions made at a SAGES non-offering RESP promoter.

The application for SAGES following a transfer from a non-offering promoter to a SAGES offering promoter will be made through a manual intervention, processed by ESDC. A SAGES request on new contributions made to the new RESP must first be submitted to ESDC through the regular monthly transaction process. Once the request is successfully processed, the SAGES offering promoter can apply for the SAGES on eligible contributions made with the non-offering promoter.

Who is involved?

The following key players participate in the application for SAGES following a transfer from a non-offering promoter:

  • participating promoter
  • subscriber
  • ESDC

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

  1. Subscriber: requests a transfer of the RESP assets from the SAGES non-offering promoter to the SAGES offering promoter.
  2. Subscriber and promoters: take the necessary steps to ensure that the transfer is processed successfully. See chapter 3-1 RESP transfers and education saving incentives.
  3. Receiving promoter: reviews the eligibility criteria to ensure the beneficiary qualifies for SAGES and completes the SAGES application form (ESDC SDE 0093-C Annex C-SAGES) with the subscriber. See 2. Eligibility criteria.

    Time constraint to apply for a SAGES payment
    A subscriber has up to three years from the date of a contribution to apply for a SAGES payment. For more information, see 7.4. Time constraints for SAGES payments.

  4. Subscriber: makes a new contribution to the RESP (with the receiving promoter offering SAGES) in respect of the beneficiary.
  5. Receiving promoter: submits SAGES request on a new contribution via an electronic transaction to ESDC. For more information, see 6.3. Requesting SAGES payments for RESP contributions.

    Manual intervention
    A SAGES request on a new contribution must be transmitted electronically and processed successfully to establish a SAGES notional account in the CESP system, before ESDC can perform a manual intervention. Promoters can contact their CESP Promoter Support Officer for additional information.

  6. ESDC: processes SAGES request on the new contribution.
  7. Receiving promoter: sends an email to ESDC to request SAGES on the transferred eligible contributions from the non-offering promoter 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).

    Three-year rule
    The RESP promoter has up to three years after the subscriber has submitted an application for SAGES to successfully process the request. For subsequent contributions, the request for SAGES must be submitted and successfully processed within three years of the original transaction date, which is the date of the contribution. The promoter must successfully submit a SAGES request for eligible contributions made at a non-offering promoter by email to ESDC within three years of the date that the subscriber completed a SAGES application. For more information, see 7.4. Time constraints for SAGES payments.

  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, see the CESP Interface Transaction Standards on the Resources for RESP promoters page under the Systems Documentation tab.
  9. Promoter: receives and deposits the SAGES payment into the RESP in respect of the beneficiary and then notifies the subscriber that the SAGES payment has been deposited into the RESP via account statements.

Example of a SAGES request following the transfer of contributions made at a SAGES non offering promoter to a SAGES offering promoter.

  • Michelle made an RESP contribution on January 1, 2014 with a non-offering SAGES promoter (Promoter A).
  • Michelle transferred her child’s RESP assets to Promoter B, a SAGES offering promoter. She made a new contribution with Promoter B and completed a SAGES application form on December 1, 2014.
  • Promoter B submitted the transaction to request SAGES on the new contribution through the CESP system which was successfully processed. Now that this request is successfully processed, Promoter B can request SAGES on eligible contributions made at Promoter A.

Time constraint for SAGES payments

  • To receive SAGES on contributions made on January 1, 2014, the subscriber must complete the SAGES application form within three years, no later than January 1, 2017.
  • As Michelle completed a SAGES application form on December 1, 2014, Promoter B has until December 1, 2017, to successfully submit a SAGES request by email to ESDC in order to receive SAGES on the eligible contribution made by Michelle at Promoter A (in accordance to the three year-rule).

7. Receiving and depositing SAGES

ESDC sends a record (RT 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 full SAGES amount is not paid
    (See 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.

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.

Example of order of payments

Erin is named in two 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

As both SAGES requests were processed for the same beneficiary in the same processing month, the CESP will process the SAGES request with the earliest transaction date first. Therefore, 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, the remaining amount available in Erin's SAGES grant room at that time. As the full SAGES amount (10% of $1000) was not paid for this contribution, Promoter B will receive a refusal reason 1 (annual limit exceeded) for this SAGES request in their Transaction Processing Report.

Multiple SAGES requests for the same contribution

When multiple SAGES requests are made for the same contribution in respect of the same beneficiary as a result of transaction errors or adjustments in the system, each request is processed but SAGES will be paid only for the last successfully processed request. This would occur even if these SAGES requests are processed in different months.

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. See 5.1 SAGES amounts in educational assistance payments (EAPs).

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 (as well as earnings generated by any other component of the RESP) can also be shared in an EAP for any eligible beneficiary named in the RESP.

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, see chapter 1-3: The CESP system and Interface Transaction Standards (ITS).

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 (RT 800). These reports are sent electronically to each promoter's head office. Promoters are responsible for correcting any errors and resubmitting corrected transactions to the CESP.

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, see Appendix E: Understanding error codes.

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 (RT 910). While 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. See also 4. Annual SAGES limits and SAGES grant room.

For more information, see Appendix F: Understanding refusal reasons .

Submitting a correction to the CESP system

To submit a correction to a financial transaction, the promoter must first submit a reversal transaction followed by a new transaction with the corrected information. Reversals indicate that the original transaction did not occur as reported.

For more information, see the CESP Interface Transaction Standards on the Systems Documentation tab of the Resources for RESP promoters page.

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 (RT 410-30) transaction dates to generate these three 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
7.4.1. Refusal reason D (late transaction)

When promoters submit incorrect information or make formatting errors in their SAGES request transactions (RT 410-30), they must correct and resubmit those transactions to the CESP in another file. If a file is sent more than three 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 (RT 910) of their transaction processing report.
Example: Refusal reason D

A SAGES request with a transaction date of November 2, 2013 was rejected due to an error and the CESP system returned a Transaction Error Report record (RT 800) to the promoter in response to this request.

To avoid a refusal reason D and obtain a SAGES payment for this request, the promoter must send a file with the corrected SAGES request transaction to the CESP system within three years (November 2, 2016) after the original SAGES transaction date and this transaction must be successfully processed by the CESP.

7.4.2. Refusal reason O (late SAGES request)

Subscribers have up to three years after the date of a contribution to apply for a SAGES payment (RT 410-30) on the contribution (RT 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 (RT 910) of their transaction processing report.
Example: Refusal reason 0

An RESP promoter was in the process of updating their system to offer SAGES, when a subscriber made an RESP contribution on October 14, 2013. To avoid receiving a refusal reason O for the SAGES request on this contribution, the subscriber must complete a SAGES application form with an eligible promoter before October 14, 2016.

7.4.3. Refusal reason 9 (other)

As of January 1, 2018, subscribers and promoters will no longer have up to three years to request SAGES on eligible contributions for the duration of the SAGES suspension. Retroactive SAGES requests must have a transaction date no later than December 31, 2017, and be submitted to the CESP system for processing by 5pm Easter time on January 5, 2018. Any SAGES request made after December 31, 2017 will receive a refusal reason 9.

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.

Repayment consequences

Repayment of SAGES will result in loss of the beneficiary's SAGES grant room, which will not be restored. For more information, see 4. Annual SAGES limits and SAGES grant room.

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. See 8.4 Submitting repayment information to the CESP system.

Promoters initiate a SAGES repayment from an RESP 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, which includes all incentive payments made for all successfully processed transactions submitted by the promoter in the previous month. All repayment amounts for the previous month are subtracted from the amount that would normally be paid to promoters in their next direct deposit.

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 overcontribution and the amount of the RESP overcontribution 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.

Withdrawals to correct an overcontribution

The subscriber must complete and provide the promoter with the following form: Subscriber Statement for an RESP Overcontribution Withdrawal of $4,000 or Less. The completed form must be kept with the subscriber's file. See Appendix D: Forms Index – Education savings incentives.

8.2.1. Calculating SAGES repayments for contribution withdrawals

When a SAGES repayment must be repaid 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

8.2.2. 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 8 of 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 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.

The ministerial review process is as follow:

  1. Subscriber: initiates the withdrawal of contributions
  2. Promoter: processes the contribution withdrawal and repayment and downloads the SAGES Waiver of Repayment form from the Forms tab on the Resources for RESP promoters page and provides a copy to the subscriber. For more information, see 8.2. SAGES repayments on contribution withdrawals.
  3. 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, Saskatchewan
    S4P 0M3
    Telephone: 1-800-597-8278

    Documentation is required to assess the request for waiver.

    Examples of supporting documentation (original or copies of documentation accepted) would include: a notice of assignment into bankruptcy including detailed explanation of the extraordinary circumstance that led to bankruptcy or financial hardship; medical documentation including evidence that any extraordinary cost was not covered by insurance; or an insurance assessment of damages to property by an unforeseen event along with confirmation of financial impact.

  4. 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. Subscriber: should the request receive a favourable review, the subscriber is required to provide the RESP promoter with the approval documentation.
  6. Promoter: submits a reversal of the SAGES repayment transaction followed by a new SAGES repayment transaction (transaction type 400-21 – repayment reason 01 - Contribution withdrawal) with the repayment amount set to zero for SAGES, deposits the SAGES payment into the RESP in respect of the beneficiary and keeps a copy of the Saskatchewan approval documentation. Note: In the case of the SAGES waiver of repayment, the reversal of the repayment transaction does not include CESG.

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 RESP is terminated;
  • the registration for the RESP is revoked;
  • an accumulated income payment (AIP) is made;
  • a payment to a designated educational institution is made;
  • an EAP is made to an individual who is not a beneficiary under the RESP;
  • an ineligible transfer occurs or
  • an ineligible beneficiary replacement occurs.
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.

8.4. 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, the promoter will submit the following transaction to the CESP system:

  • RT 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 Overcontribution withdrawal
  • 11 Other
  • 12 Non-resident

In all repayment transactions, promoters must also report the SAGES amount being repaid to ESDC. For more detailed information about how transactions are processed between the promoter and the CESP system, see chapter 1-3: The CESP system and Interface Transaction Standards.

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.

8.5.1. 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. All incentives must be repaid because the plan is terminated.

RESP Market Value Earnings Contributions SAGES CESG
$27,575 $9,375 $14,000 $1,400 $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 (RT 400-21) to CESP:

RT 400-21(03):

  • Reason code = 03 (Contract termination)
  • $1,400 in the SAGES amount field
  • $2,800 in the CESG amount field
8.5.2. When insufficient funds exist in the RESP and the plan is terminated

When the RESP is terminated, SAGES (and all other incentives in the plan that are administered by ESDC) must be repaid.

If the RESP has experienced a loss and there are insufficient funds to cover the total SAGES amount repayable, the promoter must submit a Termination Adjustment Transaction to CESP to report the shortfall.

Losses are first attributed to earnings, and then to contributions. Once these accounts are depleted, any remaining losses are apportioned equally across the incentive accounts in the RESP.

Example of when insufficient 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. All incentives must be repaid because the plan is terminated.

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

First, determine the incentive amounts that would be repayable if there are sufficient funds in the RESP:

SAGES repayable = $1,400 (if there are sufficient funds)
CESG repayable = $2,800 (if there are sufficient funds)
Total repayable = $4,200

In this example, the total amount of incentives that would normally be repayable ($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:

  1. Determine the total amount of incentives in the RESP:

    $1,400 SAGES + $2,800 CESG = $4,200

  2. Determine the percentage represented by each incentive in the RESP:

    $1,400 / $4,200 = 33.33% SAGES

    $2,800 / $4,200 = 66.67% CESG

  3. Apply these percentages to the RESP fair market value of $4,000:

    33.33% of $4,000 = $1,333.33 of SAGES that can be repaid

    66.67% of $4,000 = $2,666.67 of CESG that can be repaid

In this example, the promoter would withdraw the funds from the RESP and submit the following grant repayment transaction (RT 400-21) to CESP:

RT 400-21(03):

  • 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 EDSC. To determine the shortfall for each incentive, subtract the amount that can be paid (calculated above) from the incentive notional account balance. The following table shows the results of this calculation.

Incentive Notional account balance Amount payable (see above) Termination adjustment
SAGES $1,400 $1,333.33 $66.67
CESG $2,800 $2,666.67 $133.33
Shortfall $0 $0 $200

The promoter must submit the following Termination Adjustment transaction (RT 400-22) to inform the CESP of the $200 shortfall:

RT 400-22:

  • $66.67 in the SAGES amount field
  • $133.33 in the CESG amount field

Note: Termination adjustments are only used when terminating an RESP.

9. Other transactions involving SAGES

The promoter may also be asked to handle other transactions involving SAGES. These include:

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

    See chapter 3-1: RESP transfers and the education savings incentives

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

    See chapter 3-2: Post-secondary education and educational assistance payments (EAPs)
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