Registered Education Savings Plans contributions
You will be able to make contributions for a beneficiary only if one of the following two conditions is met:
- the beneficiary's social insurance number (SIN) is given to the promoter before the contribution is made and the beneficiary is a resident of Canada
- the contribution is made by way of a transfer from another registered education savings plan (RESP) under which the individual was a beneficiary immediately before the transfer
Note
If the plan was entered into before 1999, the beneficiary's SIN will not be required. However, such contributions will continue to be ineligible for the Canada Education Savings Grant (CESG).
Contribution rules
Generally, you can contribute to family plans for beneficiaries who are under 31 years of age at the time of the contribution. However, transfers can be made from another family plan even if one or more of the beneficiaries are 31 years of age or older at the time of the transfer.
RESP contracts can take advantage of the new age limit as long as the specimen plan under which the contract is held is amended. The amendment must be applicable for 2008 and subsequent taxation years.
RESP contributions cannot be deducted from your income. In addition, you cannot deduct the interest you paid on money you borrowed to contribute to an RESP.
RESP contribution limits
For 2007 and later years, there is no annual limit for contributions to RESPs. However, the lifetime limit on the amounts that can be contributed to all RESPs for a beneficiary is $50,000.
Payments made to an RESP under the Canada Education Savings Act or under a designated provincial program are not included when determining if the lifetime limit has been exceeded.
Tax on RESP excess contributions
An excess contribution occurs at the end of a month when the total of all contributions made by all subscribers to all RESPs for a beneficiary is more than the lifetime limit for that beneficiary. We do not include payments made to an RESP under the Canada Education Savings Program (CESP) or any designated provincial education savings programs when determining whether a beneficiary has an excess contribution.
Each subscriber for that beneficiary is liable to pay a 1% per-month tax on his or her share of the excess contribution that is not withdrawn by the end of the month. The tax is payable within 90 days after the end of the year in which there is an excess contribution. An excess contribution exists until it is withdrawn.
You have to inform us of your share of the excess contribution to all RESPs for a beneficiary. To calculate the amount of tax you have to pay on your share of the excess contribution for a year, fill out Form T1E-OVP, Individual Tax Return for RESP Excess Contributions.
You can get this form on our web site by going to Forms and Publications.
Send your completed T1E-OVP return to the following address:
Canada Revenue Agency
Registered Plans Directorate
875 Heron Road
Ottawa ON K1A0L5
There are limits on the amounts that can be contributed to RESPs for a beneficiary.
For each beneficiary, the annual limit for contributions to all RESPs is the following:
- for 1996 is $2,000
- for 1997 to 2006 is $4,000
- for 2007 and subsequent years, there is no limit
For each beneficiary, the lifetime limit for contributions to all RESPs is the following:
- for 1996 to 2006 is $42,000
- for 2007 and subsequent years is $50,000
Note
You can reduce the amount subject to tax by withdrawing the excess contributions. However, in determining whether the lifetime limit has been exceeded, we include the withdrawn amounts as contributions for the beneficiary even though they have been withdrawn.
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Example (lifetime limit)
In 2012, Hugh established an RESP for his son Allan and contributed a total of $32,000 to it prior to 2023. Allan’s grandmother, Cathy, also opened an RESP for Allan in 2012, and prior to 2023, contributed $16,000 to it. None of the prior year contributions made by Hugh and Cathy exceeded the annual or lifetime limits that were applicable in those prior years.
In January 2023, Hugh contributed $1,000 and Cathy contributed $500 to their respective RESPs and in July, both Hugh and Cathy contributed an additional $500. Hugh subsequently withdrew $500 in December.
The lifetime limit on all contributions that can be made to all RESPs for Allan is $50,000. Together Hugh and Cathy had contributed $48,000 to RESPs for Allan before 2023 and at the end of January 2023, the total contributions were $49,500 which was still within the lifetime limit for contributions to RESPs for Allan. However, at the end of July the total contributions were $50,500 and the lifetime limit was exceeded by $500.
Hugh and Cathy's share of the lifetime contributions RESP contribution Hugh Cathy Before 2023 $32,000 $16,000 Plus contribution in January 2023 $1,000 $500 Plus contribution in July 2023 $500 $500 Minus withdrawal in December 2023 ($500) 0 Total share of the lifetime contributions $33,500 $17,000 Excess contributions Hugh's lifetime contributions for Allan before 2023 $32,000 Cathy's lifetime contributions for Allan before 2023 $16,000 Total contributions to an RESP for Allan before 2023 $48,000 Maximum lifetime limit remaining (50,000 − 48,000) $2,000 Total of contributions made in 2023 for Allan $2,500 Excess contributions $500 Hugh's share of the lifetime excess contributions for 2023 was $300. This was determined by multiplying his proportion of the total contributions made to both RESPs in 2023 ($1,500 ÷ $2,500) by the excess ($500) or ($1,500 ÷ $2,500 × $500). Similarly, Cathy's share was $200 ($1,000 ÷ $2,500 × $500).
Hugh's tax payable for 2023 is calculated as follows:
Hugh's tax on his share of the excess contribution is calculated for each month the excess contribution remains in the RESP. For July to November, Hugh's tax is $300 × 1% × 5 months or $15.00.Cathy's tax payable for 2023 is calculated as follows:
Cathy's tax on her share of the excess contribution is calculated for each month the excess contribution remains in the RESP. For July to November, Cathy's tax is $200 × 1% × 5 months or $10.00. Because Hugh withdrew the excess amount in December 2023, neither Cathy nor Hugh must pay any tax on the excess contribution in December.
Waiver or cancellation of liability
We may waive or cancel all or part of the taxes if we determine it is fair to do so after reviewing all factors, including whether the tax arose because of a reasonable error and whether the tax also gave rise to more than one tax under the Income Tax Act. To consider your request, we need a letter that explains:
- why the tax liability arose
- why this is a reasonable error
- why it would be fair to cancel or waive all or part of the tax
Note
A waiver refers to penalties and interest otherwise payable by a taxpayer for which relief is granted by the CRA before these amounts are assessed or charged to the taxpayer. A cancellation refers to penalties and interest amounts that were assessed or charged to the taxpayer for which relief is granted by the CRA.
Send your letter to following address:
Canada Revenue Agency
Registered Plans Directorate
875 Heron Road
Ottawa ON K1A 0L5
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