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.
XXXX R.C. O'Byrne (613) 995-1178
November 23, 1984
Dear Sirs:
Re: Registered Educational Savings Plans for
Shareholder / Employee
This is in reply to your letter of September 26, 1984 in which you asked whether this Department would consider applying subsection 15(1) of the Income Tax Act (the "Act") to the following proposed transactions:
XXXX
You have asked whether we would consider applying subsection 15(1) of the Act when the funds are transferred from the PC to the RESP or when the RESP makes payments to the shareholder/employee.
As we discussed in our telephone conversation of November 15, 1984, the PC would not be able to establish an RESP on behalf of the shareholder/ employee because of the definition of what constitutes an RESP contained in paragraph 146.1(1)(f) of the Act and the definition of what constitutes an "education savings plan" ("ESP") contained in paragraph 146.1 (1)(c) of the Act. The definition of what constitutes a RESP indicates that an RESP is "an education saving plan accepted by the Minister for registration for the purposes of this Act". The definition of what constitutes an ESP indicates in part that an ESP is "a contract entered into at any time between an individual (in this section referred to as a "subscriber") and a person or organization (in this section referred to as a "promoter")". Because the PC is not an individual it could not establish an ESP and thus a RESP on behalf of the shareholder/employee.
If the shareholder/employee were to establish an RESP himself and the PC was to gift him the funds to make the contributions to the RESP without including these amounts in the shareholder/employee's income, it is our view that subsection 15(1) of the Act would apply to these transactions.
We trust this is the information you requested.
Yours truly,
for Director Corporate Rulings Division Legislation Branch
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