Notice #846 – Updated Pre-Transfer Repayment Policy

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• Information bulletin
• Previous bulletin
• Purpose
• Background
• Repayment of ineligible incentives
• Impact on BCTESG Transfer Policy
• Impact on A-B transfer policy
• Pre-transfer repayment process
• Pending grant
• Contact us

Information bulletin

Number:  CESP/PCEE-2019/20-009-846
Date: December 05, 2019
Subject: Updated Pre-Transfer Policy

Previous bulletin

This information bulletin follows information bulletin #845 and updates and replaces Information Bulletins #640A and #640B, dated September 23, 2015, which informed promoters of the Pre-Transfer Repayment Policy.

Purpose

The purpose of this information bulletin is to update the Pre-Transfer Repayment Policy to reflect the obligations governing transfers following the amendments made to Subsection 16(2) in the Regulations Amending the Canada Education Savings Regulations.

Background

Amendments to subsection 16(2) of the Canada Education Savings Regulations (CESR) exempted provincial education savings incentives from the requirement that, in cases of a partial transfer of property from one Registered Education Savings Plan (RESP) to another RESP, all of the property, other than the Canada Learning Bond, must be transferred proportionally. These amendments were to ensure that ineligible transfers of provincial education savings incentives do not result in the repayment of federal education savings incentives.

Therefore, in a situation where a provincial education savings incentive is transferred ineligibly, only the provincial incentive has to be repaid.

Repayment of ineligible incentives

Transfers of education savings incentives are subject to eligibility requirements in the applicable federal and provincial legislation. If an education savings incentive is transferred ineligibly, it must be repaid.

Promoters must continue to repay the balance of the incentive(s), including the Canada Education Savings Grant (CESG) and incentives paid from designated provincial programs administered by Employment and Social Development Canada (ESDC), prior to a transfer, to avoid conditions that would result in an ineligible transfer.

In a situation where the British Columbia Training and Education Savings Grant (BCTESG) is the incentive that does not satisfy all conditions for an eligible transfer, it can remain behind in the relinquishing RESP. For example, if the receiving promoter does not offer the BCTESG, the BCTESG does not need to be repaid in order to proceed with the transfer of the remaining eligible incentives.  Therefore, the BCTESG can be “left behind” in the relinquishing RESP.

Impact of BCTESG Transfer Policy

Effective June 15, 2020, in situations where the BCTESG is the incentive that does not satisfy all conditions for an eligible transfer, for example, if the receiving promoter does not offer the BCTESG, the BCTESG can remain behind in the relinquishing RESP.

This means that the BCTESG does not need to be repaid in order to proceed with the transfer of the remaining eligible incentives to be transferred. Therefore, the BCTESG can be “left behind” in the relinquishing RESP.

Impact on A-B transfer policy

There is no change to the A-B Transfer Policy, which allows a receiving promoter that does not offer the additional amount of CESG (Additional CESG), to accept a transfer including the Additional CESG providing that the receiving promoter agrees to administer the Additional CESG sibling only rule, and to report the presence of the Additional CESG in subsequent transfers. If the receiving promoter does not accept these conditions, the full balance of the Basic CESG and the Additional CESG must be repaid.

Pre-transfer repayment process

Promoters are to continue to follow the established pre-transfer repayment process as outlined in the RESP provider user guide.

Pending grant

Following the transfer, any ineligible pending grant received must be repaid and any eligible incentive must be transferred to the receiving promoter. It is the responsibility of the relinquishing promoter to determine if the pending grant can be transferred.

Contact us

If you have any questions regarding this information bulletin, please contact us by e-mail at cesp-pcee@hrsdc-rhdcc.gc.ca or by telephone at 1-888-276-3624. Our hours of operation are from 8 am to 5 pm Eastern Time.