Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues: Can a child make a contribution to an RESP where the child's parent is the subscriber under the plan?
Position: If made on behalf of the subscriber, yes.
Reasons: A contribution may be made to an RESP by a subscriber or on behalf of a subscriber. However, it is our understanding that, in accordance with the legislation administered by HRDC, payments on behalf of a subscriber are not eligible for the new Canada Education Savings Grant.
XXXXXXXXXX 2000-000895
M. P. Sarazin
March 14, 2000
Dear Sir:
Re: Contributions to a Registered Education Savings Plan ("RESP")
This is in response to your facsimile of February 1, 2000, wherein you requested a ruling as to whether a child can make contributions to an RESP where the child's parent is the subscriber and the child is the beneficiary under the RESP.
In your letter you have outlined what is an actual fact situation related to proposed transactions. As noted in Information Circular 70-6R3 (available at your local tax services office or on the internet at www.ccra-adrc.gc.ca/formspubs/menu-e.html), this directorate can only provide an opinion concerning the tax consequences associated with specific proposed transactions in the form of an advance income tax ruling. Consequently, we can only provide you with the following general comments.
There is no specific prohibition in the Act against a beneficiary contributing to an RESP established for the beneficiary. However, there is a condition for registration under paragraph 146.1(2)(g.2) that a contribution that does not occur by way of transfer from another RESP may only be made by the plan's subscriber or on behalf of the plan's subscriber. Therefore, a child beneficiary may contribute on behalf of a parent who has subscribed for an RESP to benefit the child. Note, that the reason for paragraph 146.1(2)(g.2) is to track contributions to a particular subscriber for purpose of the Part X.4 overpayment tax and the related revocation power under paragraph 146.1(12.1)(c).
The CESG program is administered in accordance with the Department of Human Resources Development Act. Consequently, any questions regarding the eligibility for the CESG should be directed to Human Resources Development Canada at 1-888-276- 3624. It is our understanding that contributions to an RESP that are made by a person other than the subscriber will not qualify for the CESG. However, we suggest that you confirm this with Human Resources Development Canada.
We trust these comments will be of assistance.
Yours truly,
P. Spice
for Director
Financial Industries Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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