Definitions for Registered Education Savings Plans


An advantage is any benefit, or debt that is conditional on the existence of the RESP, subject to certain exceptions for normal investment activities and conventional incentive program.

An advantage also includes any benefit that is an increase in the total fair market value (FMV) of the property of the RESP that is reasonably attributable to any one of the following:

An advantage also includes a registered plan strip or any benefit that is income or a capital gain that is reasonably attributable to one of the following:

For more information on advantages, see Income Tax Folio S3-F10-C3, Advantages – RRSPs, RESPs, RRIFs, RDSPs, and TFSAs.

Adjusted family net income

This is your family net income minus any Canada child benefit and registered education savings plan (RESP) income received plus any Canada child benefit and RESP amounts repaid.

Arm’s length

Refers to a relationship or a transaction between persons who act in their separate interests. An arm’s length transaction is generally a transaction that reflects ordinary commercial dealings between parties acting in their separate interests.

For more information on Arm’s length, see Income Tax Folio S1-F5-C1, Related Persons and Dealing at Arm’s length.

Common-law partner

A person who is not your spouse, with whom you are living in a conjugal relationship, and to whom at least one of the following situations applies. They:


In this definition, "12 continuous months" includes any period that you were separated for less than 90 days because of a breakdown in the relationship.

Fair market value (FMV)

Generally considered to mean the highest price expressed in terms of money that can be obtained in an open and unrestricted market between informed and prudent parties, who are dealing at arm’s length and under no compulsion to buy or sell. For more information on the valuation of securities of closely held corporations, see Information Circular IC89-3, Policy Statement on Business Equity Valuations.

Non-arm’s length 

Generally refers to a relationship or transaction between persons who are related to each other. However, a non-arm’s length relationship might also exist between unrelated individuals, partnerships or corporations, depending on the circumstances. For more information, see Income Tax Folio S1-F5-C1, Related Persons and Dealing at Arm's Length.

Non-qualified investments

A non-qualified investment is property that is not a qualified investment for the RESP trust. For more information on non-qualified investments see Income Tax Folio S3-F10-C1, Qualified Investments - RRSPs, RESPs, RRIFs, RDSPs and TFSAs.

Prohibited investments

This is property to which the RESP subscriber is closely connected. It includes any of the following:

A prohibited investment does not include a mortgage loan that is insured by the Canada Mortgage and Housing Corporation or by an approved private insurer. It also does not include certain investment funds and certain widely held investments which reflect a low risk of self-dealing. For more information on prohibited investments see Folio S3-F10-C2, Prohibited Investments - RRSPs, RESPs,  RRIFs, RDSPs and TFSAs.

Registered education savings plan (RESP)

A registered contract between an individual (the subscriber) and a person or organization (the promoter). The subscriber generally makes contributions to the RESP, which earns income, paid in the form of educational assistance payments to one or more identified beneficiaries.

Registered plan strip

The amount of a reduction in the FMV of property of the RESP, if the value is reduced as part of a transaction or event (or series) for which one of the main purposes is to enable the subscriber (or non-arm’s length person) to obtain a benefit as a result of the reduction. Exceptions are provided for plan distributions that are included in income, or specifically excluded from income (such as a tax-deferred transfer between plans).

For more information on a registered plan strip, see Income Tax Folio S3-F10-C3, Advantages – RRSPs, RESPs, RRIFs, RDSPs and TFSAs.

Specified non-qualified investment income

Income (excluding the dividend gross-up), or a capital gain that is reasonably attributable, directly or indirectly, to an amount that is taxable for any RESP of the subscriber (for example, subsequent generation income earned on non-qualified investment income)


A person to whom you are legally married.

Swap transaction

This is any transfer of property between the RESP and the subscriber (or a person not at arm’s length with the subscriber). Exceptions are provided for contributions to and distributions from the RESP, purchase and sale transactions between the RESP and another RESP of the subscriber, and transactions relating to insured mortgages.

For more information on swap transactions and applicable transitional rules, see Income Tax Folio S3-F10-C3, Advantages – RRSPs, RESPs, RRIFs, RDSPs, and TFSAs.

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