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: - Why are contribution limits to RESP so low in relation to those in the United States?
Position TAKEN: Question of Tax Policy
Reasons FOR POSITION TAKEN: The laws are set by the Department of Finance
951677
XXXXXXXXXX M.P. SarazinJuly 27, 1995
Dear Sir:
Re: Registered Education Savings Plan Contribution Limits
This is in reply to your letter dated June 13, 1995 wherein you requested our comments regarding the registered education savings plan ("RESP") contribution limits found in paragraph 146.1(2)(k) of the Income Tax Act (the "Act").
The purpose of an RESP is to allow individuals to contribute sums into trusts at regular intervals in order to generate tax-sheltered income that would be used to finance the post-secondary education costs of the trust beneficiaries. The annual and cumulative limits are designed to ensure that the amount of tax-assisted savings available under a RESP bears a reasonable relationship to the projected costs of post-secondary education. At the same time, the limits are also designed to ensure that RESPs do not have a significant impact on federal revenues.
The aggregate annual contribution limit by one or more subscribers for a particular beneficiary is $1,500 and the aggregate total contribution limit by one or more subscribers for a particular beneficiary is $31,500. The purpose of the tax under section 204.91 of the Act is to ensure that subscribers adhere to such limits.
We are sorry our reply could not be more favourable. If you wish to obtain additional clarification regarding the policy behind the legislation, we suggest that you write to the Tax Policy Branch of the Department of Finance, L'Esplanade Laurier, 140 O'Connor Street, Ottawa, Ontario, K1A 0G5.
Yours truly,
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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