10 April 1997 External T.I. 9706955 - RESP, 1997 BUDGET PROPOSALS

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:

Confirmation of RESP budget proposals

Position:

General understandings provided

Reasons:

No legislation released so no specific comments could be made

XXXXXXXXXX                      		970695

Attention: XXXXXXXXXX

April 10, 1997

Dear Sirs:

Re: Registered Educational Savings Plans (RESPs)

This is in reply to your facsimile of March 12, 1997 in which you requested clarification of various matters related to RESPs. Your questions and our replies follow.

Question 1

If the subscriber dies, can the subscriber's heirs executors, administrators or other legal representatives change the beneficiary?

Reply

Paragraph 17 of Information Circular 93-3 Registered Educational Savings Plans provides that an RESP can provide for a subscriber's heirs, executors, administrators, or other legal representatives to continue the plan on behalf of the subscriber if the subscriber dies. The Registrations Division of Revenue Canada has advised us that they will normally register an educational savings plan where the plan provides the subscriber has a right to change the beneficiary and also permits the subscriber's heirs, executers, administrators, or other legal representatives to exercise that right on the subscriber's behalf. You may contact the Registration Division directly at (613) 954-0419 should you wish to discuss this issue with them.

Question 2

With reference to the February 18, 1997, Federal Budget and motion (4) of the Notice of Ways and Means:

(A)if the subscriber dies, who can withdraw earnings from an RESP where they are not used for educational purposes;

(B) what type of tax slips should the trustee of the plan issue; and

(C) when the above earnings are rolled-over to the contributor's or the contributor's spouse's RRSP, must a tax slip be issued for the withdrawal and a receipt issued for the contribution, or will there be a special form for the transfer?

Reply

Specific comments with respect to the provisions of the Notice of Ways and Means motion tabled with the 1997 Federal budget can not be provided at this time since draft legislation was not made available with the motion. Questions concerning the intended application of the motion should be addressed to the Department of Finance. With respect to (B) and (C), questions on the administration of the provisions should be addressed to the Individual Returns and Payments Processing Directorate of Revenue Canada's Head Office. However, for the same reasons noted above, it may be more appropriate to request replies to these questions after enabling legislation and supporting regulations have been proposed.

Question 3

Assume a brother and sister have RRSPs with contributions totalling $30,000 each. Assume that the sister replaces the brother as the beneficiary of his plan. With reference to the February 18, 1997, Federal Budget and motion (8) of the Notice of Ways and Means can the subscribers of the plans contribute a further $12,000, to the sisters plan?

Reply

As noted above, specific information with respect to the provisions of the Notice of Ways and Means motion tabled with the 1997 Federal budget can not be provided at this time and questions concerning the intended application of the motions should be addressed to the Department of Finance.

We trust our comments will be of assistance to you.

Yours truly,

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