Canada Education Savings Act

Link to law: http://laws-lois.justice.gc.ca/eng/AnnualStatutes/2004_26/FullText.html

Canada Education Savings Act

S.C. 2004, c. 26

Assented to 2004-12-15

An Act to provide financial assistance for post-secondary education savings

SUMMARY

This enactment is intended to encourage the financing of post-secondary education through savings in registered education savings plans. It provides for the payment of Canada Education Savings grants in relation to contributions made to those plans. The amount of the grant is increased for children of lower- and middle-income families. It also provides for the payment of Canada Learning Bonds in respect of children of families receiving the National Child Benefit Supplement.

Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:

SHORT TITLE

Marginal note:Short title

1. This Act may be cited as the Canada Education Savings Act.

INTERPRETATION

Marginal note:Definitions

2. (1) The definitions in this subsection apply in this Act.

“Canada Learning Bond”

« bon d’études »

“Canada Learning Bond” means the bond payable or paid under section 6.

“CES grant”

« subvention pour l’épargne-études »

“CES grant” means a Canada Education Savings grant payable or paid under section 5 or under Part III.1 of the Department of Human Resources Development Act, as it read immediately before the coming into force of section 19 of this Act.

“child tax benefit”

« prestation fiscale pour enfants »

“child tax benefit” means a deemed overpayment under Subdivision a.1 of Division E of Part I of the Income Tax Act.

“national child benefit supplement”

« supplément de la prestation nationale pour enfants »

“national child benefit supplement” means that portion of a child tax benefit determined under the description of C in subsection 122.61(1) of the Income Tax Act.

“prescribed”

Version anglaise seulement

“prescribed” means prescribed by regulations.

“primary caregiver”

« responsable »

“primary caregiver” means

(a) in the case of a beneficiary who is a qualified dependant in respect of whom a child tax benefit is payable, the eligible individual in respect of the beneficiary; and

(b) in the case of a beneficiary in respect of whom a special allowance is payable under the Children’s Special Allowances Act, the department, agency or institution that maintains the beneficiary.

Marginal note:Income Tax Act expressions

(2) Unless a contrary intention appears, in this Act

(a) the expressions “adjusted income”, “eligible individual” and “qualified dependant” have the meanings assigned by section 122.6 of the Income Tax Act;

(b) the expressions “beneficiary”, “con­tribution”, “promoter”, “registered education savings plan”, “subscriber” and “trust” have the meanings assigned by section 146.1 of the Income Tax Act; and

(c) any other expression has the meaning assigned by the Income Tax Act.

PURPOSE

Marginal note:Purpose

3. The purpose of this Act is to encourage the financing of children’s post-secondary education through savings, from early childhood, in registered education savings plans.

Marginal note:Informational and promotional activities

3.1 The Minister shall take measures necessary to carry out the purpose set out in section 3, including making known to Canadians, through informational and promotional activities, the existence of CES grants and Canada Learning Bonds and any terms and conditions.

DESIGNATION OF MINISTER

Marginal note:Power of Governor in Council

4. The Governor in Council may designate a member of the Queen’s Privy Council for Canada to be the Minister for the purposes of this Act.

PAYMENTS

Marginal note:CES grants

5. (1) Subject to this Act and the regulations, on application to the Minister in a form and manner approved by the Minister, the Minister may, in respect of any contribution made in 1998 or a subsequent year to a registered education savings plan by or on behalf of a subscriber under the plan in respect of a beneficiary under the plan who is less than 17 years of age at the end of the year preceding the contribution, pay to a trustee of a trust governed by the plan a CES grant for the benefit of the trust. The payment is to be made on any terms and conditions that the Minister may specify by agreement between the Minister and the trustee.

Marginal note:Amount of grant

(2) The amount of a CES grant that may be paid for a particular year at any time is equal to the lesser of

(a) 20% of the contribution, and

(b) the amount, if any, by which the lesser of

(i) $800, and

(ii) the beneficiary’s unused CES grant room for the particular year at that time

exceeds

(iii) the total of all CES grants paid before that time — other than those amounts paid under subsection (4) — in respect of contributions made in the particular year in respect of the beneficiary.

Marginal note:Unused CES grant room

(3) The unused CES grant room for a beneficiary for a particular year at any time is

(a) if the beneficiary was 17 years of age or older at the end of the preceding year, nil; or

(b) in any other case, determined by the formula

$400 (A - B - C) - D

where


is

(i) if the beneficiary was born before 1998, the amount, if any, by which

(A) the beneficiary’s age in whole years at the end of the particular year

exceeds

(B) the beneficiary’s age in whole years at the end of 1997, and

(ii) in any other case, one plus the beneficiary’s age in whole years at the end of the particular year,


is the number of preceding years throughout which the beneficiary was an ineligible beneficiary in accordance with the regulations,


is the number of preceding years beginning after 1997,

(i) not included in the value of B in respect of the beneficiary for the particular year, and

(ii) throughout which the beneficiary was not resident in Canada, and


is the total of all CES grants paid before that time — other than those amounts paid under subsection (4) — in respect of contributions made in a preceding year in respect of the beneficiary.

Marginal note:Additional amount of grant

(4) The amount of a CES grant that may be paid for a particular year at any time is increased by the lesser of

(a) the amount that is

(i) 20% of the contribution, if the beneficiary

(A) is a qualified dependant of an eligible individual whose adjusted income used to determine the amount of a child tax benefit in respect of January in the particular year is $35,000 or less, or

(B) is a person in respect of whom a special allowance under the Children’s Special Allowances Act is payable for at least one month in the particular year, and

(ii) 10% of the contribution, if the beneficiary is a qualified dependant of an eligible individual whose adjusted income used to determine the amount of a child tax benefit in respect of January in the particular year is more than $35,000 but not more than $70,000, and

(b) the amount by which

(i) $100, in the case of a beneficiary referred to in subparagraph (a)(i), or

(ii) $50, in the case of a beneficiary referred to in subparagraph (a)(ii)

exceeds

(iii) the total of all amounts paid under this subsection before that time in respect of contributions made in the particular year in respect of the beneficiary.

Marginal note:No determination for January

(5) If there has been no determination of eligibility for a child tax benefit in respect of January in a particular year, the adjusted income to be used for the purposes of subsection (4) is the adjusted income used to determine the amount of a child tax benefit for the first month in the particular year in respect of which eligibility has been established.

Marginal note:Beneficiary born in December

(6) In applying subsection (5) in respect of a beneficiary born in December, the reference to “the first month in the particular year in respect of which eligibility has been established” in that subsection is to be read as a reference to “January of the next year”.

Marginal note:Designation

(7) The amount referred to in subsection (4) is to be paid to the trustee of a trust designated, in the form and manner approved by the Minister, by the primary caregiver of the beneficiary at the time the contribution is made.

Marginal note:Indexing

(8) The amounts $35,000 and $70,000 referred to in subsection (4) are to be adjusted for each year that is after 2004 in the manner set out in section 117.1 of the Income Tax Act.

Marginal note:Restriction

(9) Subsection (4) applies only to contributions made in 2005 or a subsequent year.

Marginal note:Lifetime cap

(10) Not more than $7,200 in CES grants may be paid in respect of a beneficiary during their lifetime.

Marginal note:Canada Learning Bonds

6. (1) Subject to this Act and the regulations, on application to the Minister, in the form and manner approved by the Minister, the Minister may, in respect of a beneficiary under a registered education savings plan who was born after 2003 and is less than 21 years of age at the time of the application, pay to a trustee of a trust governed by the plan a Canada Learning Bond for the benefit of the trust. The bond is to be paid on any terms and conditions that the Minister may specify by agreement between the Minister and the trustee.

Marginal note:Amount of bond

(2) The amount of a Canada Learning Bond is equal to the sum of the following amounts:

(a) $500 in respect of the first benefit year in which the beneficiary

(i) is a person less than 15 years of age at the beginning of the month immediately before the benefit year, or

(ii) is born during the benefit year or during the month immediately before it,

and in respect of whom a national child benefit supplement, or a special allowance under the Children’s Special Allowances Act, is payable for at least one month in that year, and

(b) $100 in respect of any subsequent benefit year in which the beneficiary is a person less than 15 years of age at the beginning of the month immediately before the benefit year and in respect of whom a supplement or an allowance referred to in paragraph (a) is payable for at least one month in that year.

Marginal note:Meaning of “benefit year”

(3) In this section, “benefit year” means the period that starts on July 1 in one year and ends on June 30 of the next year.

Marginal note:Designation

(4) The amount of a bond in respect of a benefit year is to be paid to the trustee of a trust designated, in the form and manner approved by the Minister, by the primary caregiver of the beneficiary or, if the beneficiary is 18 years of age or more, by the beneficiary.

Marginal note:Additional payment

(5) When the Minister pays the amount under paragraph (2)(a), the Minister may, in prescribed circumstances, pay into the trust an additional amount determined in accordance with the regulations in recognition of the cost of administering registered education savings plans.

Marginal note:Conditions

7. Neither a CES grant nor a Canada Learning Bond may be paid in respect of a beneficiary under a registered education savings plan unless

(a) the Minister is provided with the Social Insurance Number of the beneficiary;

(b) the Minister is provided with the Social Insurance Number of the individual, or the business number of the department, agency or institution, that made a designation under subsection 5(7) or 6(4); and

(c) the beneficiary is resident in Canada, in the case of a CES grant, at the time the contribution to the plan is made and, in the case of a Canada Learning Bond, immediately before the payment is made.

Marginal note:Interest

8. The Minister may, in prescribed circumstances, pay interest, determined in accordance with prescribed rules, in respect of CES grants or Canada Learning Bonds.

Marginal note:Payments out of CRF

9. All amounts payable by the Minister under this Act, the regulations or an agreement entered into under section 12 shall be paid out of the Consolidated Revenue Fund.

Marginal note:Waiver

9.1 (1) On application made by the primary caregiver of the beneficiary or, if the beneficiary is 18 years of age or more, by the beneficiary, the Minister may, to avoid undue hardship, waive any of the requirements of this Act or the regulations that relate to the payment of CES grants or Canada Learning Bonds and that are specified in regulations made under paragraph 13(g). The application must be in the form and manner approved by the Minister.

Marginal note:Restriction

(2) Despite subsection (1), the Minister may not waive any requirement related to the determination of eligibility for a child tax benefit or a national child benefit supplement, or for a special allowance under the Children’s Special Allowances Act.

GENERAL

Marginal note:Recovery of payments and interest

10. An amount required to be repaid to the Minister under this Act, the regulations or under an agreement entered into under this Act, other than an agreement referred to in section 12, and any interest due in respect of the amount constitute a debt due to Her Majesty in right of Canada and is recoverable as such in the Federal Court or any other court of competent jurisdiction.

Marginal note:Access to information

11. (1) Subject to subsection (3) and except as otherwise prescribed, all information obtained in the course of the administration or enforcement of this Act or under a program administered pursuant to an agreement entered into under section 12 is privileged, and no person shall knowingly make it available or allow it to be made available to any other person except for the purpose of the administration or enforcement of this Act, the Income Tax Act or that program.

Marginal note:Social Insurance Number information

(2) Subject to subsection (3), no person shall knowingly use, communicate or allow to be communicated the Social Insurance Number of an individual that was obtained for a purpose related to an application for a CES grant or a Canada Learning Bond under this Act or for a benefit under a program administered pursuant to an agreement entered into under section 12 except for the purpose of the administration or enforcement of this Act, the Income Tax Act or that program.

Marginal note:Provisions of Canada Pension Plan re information applicable

(3) Except as otherwise prescribed, sections 104 to 104.03, 104.05 to 104.08, 104.1 and 104.11 of the Canada Pension Plan relating to the protection of personal information apply, with any modifications that the circumstances require, to this Act and shall be read as if they were contained in this Act but, for the purposes of this Act,

(a) any matter or thing that is to be or may be prescribed under any of those sections is to be or may be prescribed under this Act; and

(b) a reference in any of those sections to the Minister shall be read as a reference to the Minister under this Act.

Marginal note:Authority to enter into agreements with provinces

12. (1) The Minister may, with the approval of the Minister of Finance, enter into agreements with the government of any province to administer provincial programs consistent with the purpose of this Act.

Marginal note:Fees and charges

(2) An agreement entered into under subsection (1) may include provisions respecting the fees or charges to be paid for a service provided by or on behalf of the Minister under the agreement.

Marginal note:Amounts charged

(3) The amounts of the fees or charges referred to in subsection (2) may not exceed the cost of providing the service.

Marginal note:Amounts received

(4) Subject to conditions imposed by the Treasury Board, any amounts received by the Minister for services may be used by the Minister for administering the provincial programs referred to in subsection (1).

Marginal note:Regulations

13. The Governor in Council may make regulations for carrying out the purpose and provisions of this Act and, without limiting the generality of the foregoing, may make regulations

(a) respecting any matter or thing that by this Act is to be or may be prescribed or otherwise determined under the regulations;

(b) establishing conditions that must be met by a registered education savings plan and by persons in respect of the plan before a CES grant or a Canada Learning Bond may be paid in respect of the plan;

(c) establishing the manner of determining the amount of a CES grant that may be paid in respect of contributions to registered education savings plans or the amount of a Canada Learning Bond that may be paid into those plans;

(d) specifying terms and conditions to be included in agreements entered into between a trustee under a registered education savings plan and the Minister relating to the terms and conditions applicable to the payment of a CES grant or a Canada Learning Bond and specifying, for inclusion in the agreements, in addition to any other conditions that the Minister considers appropriate, the obligations of a trustee under an agreement;

(e) prescribing the circumstances in which an additional amount may be paid under subsection 6(5) and establishing the manner of determining the amount of the payment;

(f) specifying terms and conditions to be included in agreements entered into between promoters of registered education savings plans and the Minister;

(g) specifying the requirements of this Act or the regulations relating to the payment of CES grants or Canada Learning Bonds that may be waived by the Minister to avoid undue hardship;

(h) governing or prohibiting the sharing of CES grants or Canada Learning Bonds, and the earnings generated on them;

(i) specifying circumstances under which all or part of any amount paid under this Act is to be repaid to the Minister;

(j) specifying circumstances under which the earnings generated on Canada Learning Bonds repaid under regulations made under paragraph (i) are to be repaid to the Minister and establishing the manner of determining the amount of those earnings; and

(k) establishing, for the purpose of determining an amount required to be repaid under this Act in respect of CES grants or Canada Learning Bonds, the manner of determining the portion, if any, of an educational assistance payment made under a registered education savings plan that is attributable to CES grants or Canada Learning Bonds, as the case may be.

TRANSITIONAL PROVISION

Marginal note:Agreements

14. Every agreement entered into under Part III.1 of the Department of Human Resources Development Act that is in force immediately before the coming into force of section 5 of this Act is deemed to be an agreement entered into under that section and continues in force until it terminates.

CONSEQUENTIAL AMENDMENTS

R.S., c. A-1Access to Information Act

Marginal note:1998, c. 21, s. 73

15. Schedule II to the Access to Information Act is amended by striking out the following:

Department of Human Resources Development Act

Loi sur le ministère du Développement des ressources humaines

and by striking out the corresponding reference to “section 33.5”.

16. Schedule II to the Act is amended by adding the following in alphabetical order:

Canada Education Savings Act

Loi canadienne sur l’épargne-études

and by adding a corresponding reference to “section 11”.

1992, c. 48, Sch.Children’s Special Allowances Act

17. Subparagraph 3(1)(a)(ii) of the Children’s Special Allowances Act is replaced by the following:

(ii) by an agency appointed by a province, including an authority established under the laws of a province, or by an agency appointed by such an authority, for the purpose of administering any law of the province for the protection and care of children,

Marginal note:1998, c. 19, s. 258(1)

18. Subsection 10(2) of the Act is replaced by the following:

Marginal note:Release of information

(2) Any information obtained by or on behalf of the Minister in the course of the administration or enforcement of this Act or the regulations or the carrying out of an agreement entered into under section 11 may be communicated to any person if it can reasonably be regarded as necessary for the purposes of the administration or enforcement of this Act, the Income Tax Act or the Canada Education Savings Act or a program administered pursuant to an agreement entered into under section 12 of that Act.

1996, c. 11Department of Human Resources Development Act

Marginal note:1998, c. 21, s. 72

19. Part III.1 of the Department of Human Resources Development Act is repealed.

R.S., c. 1 (5th Supp.)Income Tax Act

20. Paragraph 60(x) of the Income Tax Act is replaced by the following:

Marginal note:Repayment under Canada Education Savings Act

(x) the total of all amounts each of which is an amount paid by the taxpayer in the year as a repayment, under the Canada Education Savings Act or under a program administered pursuant to an agreement entered into under section 12 of that Act, of an amount that was included because of subsection 146.1(7) in computing the taxpayer’s income for the year or a preceding taxation year.

21. (1) The definition “contribution” in subsection 146.1(1) of the Act is replaced by the following:

“contribution”

« cotisation »

“contribution”, into an education savings plan, does not include an amount paid into the plan under the Canada Education Savings Act or under a program administered pursuant to an agreement entered into under section 12 of that Act;

(2) The portion of the definition “education savings plan” in subsection 146.1(1) of the Act before paragraph (b) is replaced by the following:

“education savings plan”

« régime d’épargne-études »

“education savings plan” means an arrangement entered into between

(a) any of the following, namely,

(i) an individual (other than a trust),

(ii) an individual (other than a trust) and the spouse or common-law partner of the individual, and

(iii) a public primary caregiver of a beneficiary, and

(3) Paragraph (a) of the definition “subscriber” in subsection 146.1(1) of the Act is replaced by the following:

(a) each individual or the public primary caregiver with whom the promoter of the plan enters into the plan,

(a.1) another individual or another public primary caregiver who has before that time, under a written agreement, acquired a public primary caregiver’s rights as a subscriber under the plan,

(4) The portion of the definition “subscriber” in subsection 146.1(1) of the Act after paragraph (b) is replaced by the following:

(c) after the death of an individual described in any of paragraphs (a) to (b), any other person (including the estate of the deceased individual) who acquires the individual’s rights as a subscriber under the plan or who makes contributions into the plan in respect of a beneficiary

but does not include an individual or a public primary caregiver whose rights as a subscriber under the plan had, before that time, been acquired by an individual or public primary caregiver in the circumstances described in paragraph (a.1) or (b);

(5) Paragraph (c.1) of the definition “trust” in subsection 146.1(1) of the Act is replaced by the following:

(c.1) the repayment of amounts (and the payment of amounts related to that repayment) under the Canada Education Savings Act or under a program administered pursuant to an agreement entered into under section 12 of that Act,

(6) Subsection 146.1(1) of the Act is amended by adding the following in alphabetical order:

“public primary caregiver”

« responsable public »

“public primary caregiver”, of a beneficiary under an education savings plan in respect of whom a special allowance is payable under the Children’s Special Allowances Act, means the department, agency or institution that maintains the beneficiary or the public trustee or public curator of the province in which the beneficiary resides;

(7) Paragraph 146.1(2)(d.1) of the Act is replaced by the following:

(d.1) subject to subsection (2.2), if the plan allows accumulated income payments, the plan provides that an accumulated income payment is permitted to be made only if

(i) the payment is made to, or on behalf of, a subscriber under the plan who is resident in Canada when the payment is made,

(ii) the payment is not made jointly to, or on behalf of, more than one subscriber, and

(iii) any of

(A) the payment is made after the 9th year that follows the year in which the plan was entered into and each individ­ual (other than a deceased individual) who is or was a beneficiary under the plan has attained 21 years of age before the payment is made and is not, when the payment is made, eligible under the plan to receive an educational assistance payment,

(B) the payment is made in the 25th year following the year in which the plan is entered into, or

(C) each individual who was a beneficiary under the plan is deceased when the payment is made;

(7.1) Clause 146.1(2)(g.1)(i)(A) of the Act is replaced by the following:

(A) the individual is at that time enrolled as a full-time or part-time student in a qualifying educational program at a post-secondary educational institution, or

(8) Clause 146.1(2)(g.1)(ii)(B) of the Act is replaced by the following:

(B) the total of the payment and all other educational assistance payments made under a registered education savings plan of the promoter to or for the individual in the 12-month period that ends at that time does not exceed $5,000 or any greater amount that the Minister designated for the purpose of the Canada Education Savings Act approves in writing with respect to the individual;

(9) Paragraph 146.1(2)(l) of the Act is replaced by the following:

(l) the plan provides that the promoter shall, within 90 days after an individual becomes a beneficiary under the plan, notify the individ­ual (or, where the individual is under 19 years of age at that time and either ordinarily resides with a parent of the individual or is maintained by a public primary caregiver of the individual, that parent or public primary caregiver) in writing of the existence of the plan and the name and address of the subscriber in respect of the plan;

(9.1) Subsection 146.1(2.2) of the Act is replaced by the following:

Marginal note:Waiver of conditions for accumulated income payments

(2.2) The Minister may, on written application of the promoter of a registered education savings plan, waive the application of the conditions in clause (2)(d.1)(iii)(A) in respect of the plan where a beneficiary under the plan suffers from a severe and prolonged mental impairment that prevents, or can reasonably be expected to prevent, the beneficiary from enrolling in a qualifying educational program at a post-secondary educational institution.

(10) The portion of paragraph 146.1(6.1)(b) of the Act before subparagraph (i) is replaced by the following:

(b) for the purposes of this paragraph and paragraphs (2)(d.1), (h) and (i), the transferee plan is deemed to have been entered into on the day that is the earlier of

(11) Paragraph 146.1(12.1)(e) of the Act is replaced by the following:

(e) a day on which a person fails to comply with a condition or an obligation, imposed under the Canada Education Savings Act or under a program administered pursuant to an agreement entered into under section 12 of that Act, that applies with respect to a registered education savings plan,

(12) Section 146.1 of the Act is amended by adding the following after subsection (13.1):

Marginal note:Former Act

(14) A reference

(a) in this section, in paragraph 60(x) or in subparagraph 241(4)(d)(vii.1) to the Canada Education Savings Act, to an amount paid, to the payment of an amount or to the repayment of an amount, or to a condition or an obligation imposed, under that Act includes a reference to Part III.1 of the Department of Human Resources Development Act, or to an amount paid, to the payment of an amount or to the repayment of an amount, or to a condition or an obligation imposed, as the case may be, under that Part as it read at the time the reference is relevant; and

(b) in clause (2)(g.1)(ii)(B) to an amount that the Minister designated for the purpose of the Canada Education Savings Act approves in writing with respect to an individual includes a reference to an amount that the Minister of Human Resources Development or the Minister of State to be styled Minister of Human Resources and Skills Development has approved in writing, before the day on which a Minister is designated for the purposes of that Act, with respect to the individual.

22. Subparagraph 241(4)(d)(vii.1) of the Act is replaced by the following:

(vii.1) to an official solely for the purpose of the administration or enforcement of the Canada Education Savings Act or a program administered pursuant to an agreement entered into under section 12 of that Act,

COMING INTO FORCE

Marginal note:Order in council

23. The provisions of this Act, other than sections 4, 12, 17 and 20 to 22, come into force on a day or days to be fixed by order of the Governor in Council.
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