16 January 1996 External T.I. 9529495 - SALE OF RESP, RIGHTS

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 subscriber sell his interest in an RESP?

Position:

No

Reasons:

A subscriber has certain rights under an RESP contract and those rights may or may not be disposed of.

	        	952949
XXXXXXXXXX		M.P. Sarazin

Attention: XXXXXXXXXX

January 16, 1996

Dear Sirs:

Re: Registered Education Savings Plan ("RESP")

This is in reply to your letter dated November 6, 1995 wherein you requested our comments as to whether a subscriber of an RESP can sell the RESP where the RESP beneficiary dies and the subscriber has no other person they can name as a beneficiary under the plan.

Comments

Information Circular 93-3 (a copy enclosed) explains the provisions of the Income Tax Act (the "Act") and the administrative requirements for registering education savings plans. In the case where a beneficiary dies, the terms of the particular RESP will determine the alternatives available to the subscriber and, in this regard, we refer you to paragraph 17 wherein it states:

"The plan can provide for the subscriber to have another person receive a refund of payments made into the plan. However, the plan must state that this person cannot change the beneficiary. Also, the subscriber to an RESP cannot change. ..."

We are of the view that a subscriber will have certain rights under an RESP and the particular rights in each case will depend on the provisions of the specific RESP. Generally, a subscriber's rights under an RESP will include a right to a "refund of payments", as defined in paragraph 146.1(1)(e) of the Income Tax Act, and a right to name the RESP beneficiary or beneficiaries and such rights normally constitute capital property for purposes of the Act. An RESP may also provide the subscriber with the right to change the beneficiary and, in this regard, we refer you to paragraph 23 of Information Circular 93-3. Consequently, a subscriber is not able to sell an RESP but he or she may be able to dispose of certain of his or her rights under the particular RESP.

We trust the above comments will be of assistance to you.

Yours truly,

for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch